SYDNEY (Reuters) – Australian house prices in December marked the first monthly decline in almost two years, as high mortgage rates hit affordability and more sellers emerged after a long streak of gains.
Figures from property consultancy CoreLogic, released on Thursday, showed prices across the country fell 0.1% in December from the previous month, while values in major capitals fell 0.2%.
Sydney prices fell 0.6% in December, while Melbourne lost 0.7%. Brisbane, Perth and Adelaide continued to enjoy monthly gains.
“Home value growth has been steadily weakening over the second half of the year as affordability constraints weighed on buyer demand and announced supply levels trended higher,” said Tim Lawless, director of CoreLogic research.
Property values still increased by 4.9% by 2024 as a whole, adding around A$38,000 to the median home value, which in Sydney now stands at A$1.2 million (745,680.00 dollars).
The government statistician estimates that the value of land and housing held by households rose by A$851 billion in the year to September, reaching a notional value of A$11.3 trillion.
The strength of the market in recent years has surprised policymakers, given that interest rates had reached 12-year highs of 4.35% by the end of 2023.
The Reserve Bank of Australia (RBA) recently opened the door to a rate cut as early as February, but markets expect only a modest easing to around 3.60% throughout 2025.
“It will take a lot more than three or four rate cuts to get interest rates back to the pre-pandemic decade average of 2.55%,” Lawless said.
“Therefore, we do not expect lower rates to be the catalyst for a renewed phase of strong value growth.”
A Reuters poll in November forecast home prices would rise by around 5% in both 2025 and 2026, due in part to strong population growth and a lack of new supply.
($1 = 1.6093 Australian dollars)