National property analytics firm CoreLogic made a big call in declaring the upswing in home values “all but over” as values rose just 0.1% in November.
It’s the weakest Australia-wide result since January 2023 and CoreLogic research director Tim Lawless said it could be “close to the last” month of home value growth after a 22-month-long run.
The property downturn is gaining momentum in Melbourne and Sydney, although markets in Perth, Brisbane, Adelaide and many of the regions continue to prop up growth in the national index.
“The mid-sized capitals and most of the regional ‘rest of state’ markets continue to provide some support for growth in the national index, but it’s clear momentum is also leaving these markets,” Mr Lawless said.
CoreLogic Home Value Index as at 30 November 2024
Source: CoreLogic
Tale of two markets
Melbourne home values continue to head lower, losing another 0.4% in November and taking the annual loss to -2.3%.
Melbourne housing values have returned negative growth in ten of the past 12 months, the data shows.
Meantime, Sydney dwelling prices followed up a -0.1% drop in October with a larger -0.2% fall in November.
On a rolling quarterly basis, Melbourne (-1.0%) is experiencing the worst drop of the four capital cities seeing losses, leading Darwin (-0.7%), Sydney (-0.5%), and Canberra (-0.3%).
Hobart saw a 0.4% rise in dwelling values over the quarter despite recording a -0.1% drop for November and a -1.0% fall over the past year.
Growth slowing in Perth, Brisbane, Adelaide
Conversely, Perth’s pace of capital gain continues to lead the nation, with values up 1.1% in November and 3% over the past three months.
But this was the softest rise over a rolling three-month period since April 2023 and less than half the growth rate the city's property market experienced in the June quarter – 6.7%.
Brisbane’s quarterly growth rate also eased to 1.8%, its slowest gain since March 2023, while Adelaide’s 2.3% quarterly rise in values was its lowest since June 2023.
Regional index weighed down by Victoria
Overall, regional housing trends have been stronger than the national index, rising 1.1% over the quarter just been compared to the 0.3% increase across the combined capital cities.
But Victoria weighed on the regional market, losing 0.9% over the rolling quarter while every other state recorded a rise.
Western Australia again led the pack with a 3.3% uptick in regional home values over the quarter.
More housing stock on the market
The three months of Spring, traditionally the busiest season in the property game, saw a lift in the supply of houses and units advertised for sale nationally, which carried to November.
Capital city listings have risen 16% since the end of winter, with Perth (+33%) and Adelaide (+25%) recording the biggest rise in advertised properties, albeit from a very low base.
Sydney and Melbourne are also tracking 10.4% and 9.1% above their previous five-year averages, both boasting their highest levels of November stock since 2018.
Greater supply of homes is accompanied by slowing demand, with CoreLogic estimating capital city home sales have dropped -4.6% over the past three months.
Sydney has seen the biggest drop in home sales over the rolling quarter, with sales an estimated -15.4% lower than a year ago and -15.1% down on the previous five-year average.
‘Rental boom over’
In good news for renters, the national rent index rose a modest 0.2% in November, leaving it 5.3% higher than it was 12 months ago.
It’s the smallest annual change in national rents since April 2021 and well under the peaks of more than 9% for each of the previous two years.
“At 5.3% annual growth, rents are still rising at more than twice the pre-pandemic decade average of 2.0%, but given the weak monthly change, the annual trend is set to slow further from here,” Mr Lawless said.
The first quarter of each year is traditionally a peak time for rental growth but beyond the usual seasonal boost, Mr Lawless said it “looks increasingly like the rental boom is over”.
Perth continues to post the highest annual rental growth rates in the country at 9.7%, but that’s eased from 16.6% around a year ago.
What’s ahead for 2025?
CoreLogic said the outlook for housing markets has “arguably deteriorated” over the past month, saying until interest rates come down, it’s difficult to see the weakening housing trend turning around.
“A lower cash rate will be a positive for housing markets,” Mr Lawless said.
“Lower mortgage rates will provide a lift to borrowing capacity and, along with lower inflation, should see an improvement in serviceability assessments and see a further rise in consumer sentiment.”
Financial markets are pricing in a cash rate cut around the middle of next year.
On Friday, ANZ joined its big four peers NAB and Westpac in pushing back its forecast for a Reserve Bank cash rate cut to May 2025.
The call leaves Commonwealth Bank as the outlier among the major banks, sticking with its forecast of February.
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