Australian house prices declined for the first time in 22 months last month as buyers increasingly found themselves priced out of the market, while the supply of properties increased.
The Home Value Index for major cities slid 0.2 percent for its first fall since February 2023, property consultancy CoreLogic Inc said yesterday. Melbourne and Sydney, the two biggest markets, led the declines with drops of 0.7 percent and 0.6 percent respectively.
On the other side of the country, Western Australia’s state capital Perth led gains with a 0.7 percent increase, followed by the southern city of Adelaide, up 0.6 percent. Those two cities also recorded the largest annual gains of 19.1 percent and 13.1 percent respectively. Yet even here the pace of appreciation had slowed in recent months.
Photo: Bloomberg
“Growth in housing values has been consistently weakening through the second half of the year, as affordability constraints weighed on buyer demand and advertised supply levels trended higher,” said CoreLogic research director Tim Lawless said.
“With worsening affordability constraints and reduced borrowing capacity, we have seen buyer demand pushed toward lower-priced markets,” he said.
Higher interest rates, a shortage of homes and booming population growth have triggered a housing crisis in parts of Australia. The problem has been particularly acute in Sydney where buyers are being priced out of the market given an average home costs 13 times income.
Yet costs have now reached such a level that, combined with interest rates at a 13-year high of 4.35 percent, buyers are simply unable to raise the funds required to purchase a home. As a result, rents have also soared, though that market also ended the year on a softer note, CoreLogic said, citing a rise in the size of households in major cities and a cooling in migration.
“The final months of 2024 have set the framework for a soft start to 2025,” CoreLogic said. “However, as with 2024, we could likely see another year of multi-speed conditions, with the potential for a modest rebound in value growth once interest rates start coming down.”
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