Almost two years of national house price growth could soon end as mid-sized capitals and mining regions struggle to overcome falls in major cities.
Property data firm CoreLogic posted a 0.1 per cent rise in November despite recessions gaining momentum in Sydney and Melbourne.
“Mid-sized capital cities and most ‘rest of the states’ regional markets continue to provide some support to the growth of the national index, but it is clear that momentum is leaving these markets as well,” CoreLogic’s research director said Monday. , Tim Lawless.
While the average homeowner has absorbed nearly 40 percent of the growth since March 2020, helped by a continued streak of 22 monthly increases, 2025 appears to be shaping up to be a buyer’s market.
The weakening trend in housing was expected to continue until interest rates were lowered, CoreLogic said.
Forecasts for that cut eased towards mid-2025 after core inflation in October remained above the Reserve Bank’s target range.
“A lower interest rate will be a positive factor for property markets,” Mr Lawless said.
“A couple of rate cuts could be enough to shore up a downward trend in home values, but it’s hard to see any material upward pressure returning until interest rates are lowered more substantially and affordability barriers less formidable.”
Home purchases fell in Sydney and values fell 0.2 per cent in November
Selling conditions deteriorated during the traditionally busy spring season, with more supply available and less buying activity.
Fewer than three in five capital auctions end in a sale, while private treaty sales are taking longer.
Purchasing activity has fallen most sharply in Sydney, where values fell 0.2 per cent in November and 0.5 per cent over the quarter.
That’s half the speed of Melbourne’s falls, while small monthly increases in Canberra and Darwin failed to erase quarterly falls there too.
Leaders Perth and Adelaide are also slowing, with quarterly increases of 3.0 per cent and 2.8 per cent respectively, the worst in about 18 months.
Mining regions in WA and Queensland have led the charge across the regions, with property values in Mackay, Geraldton and Townsville rising by at least 6.6 per cent over the quarter.
Meanwhile, national incomes are weakening under the weight of slower population growth, particularly lower net overseas migration, and a gradual recovery in average household size.
Rents increased 0.2 percent in November, up 5.3 percent from last year.
Perth enjoyed a three per cent quarterly increase, according to data from CoreLogic.
While it is double the average for the 2010s, the annual increase is almost half that of the previous two years.
“Beyond any seasonality, it increasingly looks like the rental boom is over,” Lawless said.
“A record low in rental affordability is likely a central reason for the rebound in household sizes, and high rents are likely to force household restructuring as renters look for ways to minimize their housing costs.” “said Mr. Lawless.
Tax changes approved by federal parliament last week are also expected to increase rental stock by up to 80,000 build-to-rent properties within a decade.
Record low levels of rental vacancies have also prompted several state governments to strike a fairer balance between tenants and landlords.
Reforms soon to be enacted in New South Wales ban groundless evictions, ban background check fees and limit rent increases to once a year.
The proposed changes in Victoria would allow tenants to challenge a rent increase based solely on their size.
This is after complaints soared to Consumer Affairs Victoria and the agency which deemed around 1,500 rent increases “excessive” under current laws.