Australia’s housing market is showing early signs of a slowdown, with property values dipping slightly after nearly two years of consistent growth.
CoreLogic’s national Home Value Index fell by 0.1% in December, indicating a potential, though mild, downturn.
The decline is largely attributed to falling housing values in Sydney and Melbourne, which represent 40% of the country’s housing stock, along with slowing activity in other regions.
CoreLogic’s head of research, Eliza Owen, suggested that while a cyclical downswing may occur in early 2025, it is unlikely to be significant.
She noted that recovery in housing values won’t likely happen until broader challenges like housing affordability and loan serviceability are addressed.
Despite slower economic growth and high interest rates affecting demand, Owen pointed out that supply constraints could help prevent a major downturn, as sellers may delay listing properties.
However, she believes the chances of a large number of forced property sales are low, given stable unemployment and the ability of most homeowners to manage current interest rates.
Other factors, such as rising real incomes, potential interest rate cuts, and ongoing housing shortages, could also temper the downturn.
The Reserve Bank of Australia’s upcoming meeting in February may provide further insight into future interest rate moves, though any rate cuts are expected to be gradual.
