2024 Australian Housing Market: A Year of Growth, Then Slowdown

2024 Australian Housing Market: A Year of Growth, Then Slowdown

The Australian housing market experienced an eventful 2024, with significant changes in home prices, buyer sentiment, and market conditions. According to Domain’s recently released 2024 House Price Report, the year began with strong growth, followed by a slowdown in the second half as affordability pressures, cost-of-living concerns, and rising interest rates took their toll. Here’s a breakdown of what happened in the market and what you can expect moving into 2025.

Record Highs: Brisbane, Adelaide, and Perth Shine

Throughout 2024, house and unit prices across the combined capitals continued to climb, with some cities hitting record highs. This marks the eighth consecutive quarter of growth for houses and the seventh for units.

Cities like Brisbane, Adelaide, and Perth ended the year with their highest-ever house and unit prices, with Sydney units also setting a new record. These more affordable capital cities and the unit sector in some cities were the standout performers of the year.

Here’s a snapshot of the annual growth by city:

• Perth: House prices up by 19.5%, Unit prices up by 28.2%
• Adelaide: House prices up by 14.6%, Unit prices up by 13.6%
• Brisbane: House prices up by 10.9%, Unit prices up by 18.1%

The more affordable cities have been driving this growth, attracting both first-home buyers and investors.

A Shift Towards Slower Growth

While the first half of 2024 saw continued growth, the second half of the year revealed a shift in the market. The December quarter showed the weakest growth in the past two years, signaling that the market may be reaching its peak.

• House price growth more than halved in comparison to the same quarter the previous year.
• Unit price growth also slowed, dropping by around 25%.

This marks a significant slowdown compared to earlier in the year and points to a broader trend of decelerating growth across the capital cities.

Why Is the Market Slowing Down?

The slowdown is largely driven by ongoing affordability pressures. Home prices have been rising steadily, but wages haven’t kept pace, and the ongoing cost-of-living squeeze has made it harder for many buyers to keep up.

In addition, rising interest rates and tighter lending conditions have reduced borrowing capacity for many potential buyers. As a result, many are holding off, hoping for a reduction in the cash rate to boost their borrowing power.

However, there is some positive news for buyers: supply is on the rise. 2024 ended with the highest number of homes for sale in December in three years across the combined capitals, and the increase was even more pronounced in Sydney, where listings reached a six-year high. This growing inventory is contributing to softer clearance rates, longer time on the market, and more room for price negotiations.

Sydney’s Market: A Modest Decline

In Sydney, house prices saw a slight drop in the December quarter. The average house price fell by $1,300 (0.1%) to $1.645 million, marking the second consecutive quarterly decline. In fact, house prices are now just over $7,000 lower than the peak reached in June 2024, which represents the first back-to-back quarterly decline in two years.

On the other hand, Sydney’s unit market remained resilient. Unit prices increased by $3,000 (0.4%) over the December quarter, reaching a record high of $812,863. However, the pace of growth has slowed slightly compared to the same time last year, with annual gains falling to 2.6% — the lowest since September 2023.

It’s clear that the unit sector is performing better than houses, with units narrowing the price gap between the two property types. As of late 2024, houses cost 102% more than units, down from a peak of 105% in mid-2024.

Looking Ahead: What Does 2025 Hold?

The Australian housing market is entering a period of slowdown and decline across all capital cities as affordability challenges, rising costs, and limited borrowing capacity continue to take their toll. As we move into 2025, it’s clear that the market has shifted, and conditions are now more favorable for buyers than they have been in recent quarters.

More homes on the market, softer clearance rates, and price negotiations all signal that the housing market could be heading into a more buyer-friendly phase. This trend is likely to continue into the autumn selling season, creating more opportunities for those ready to take the plunge.

For sellers, while prices have slowed, there are still opportunities to capitalize on the record highs seen in previous quarters, especially if you’re in one of the top-performing cities.

Conclusion

2024 was a year of two halves for the Australian housing market. Prices rose sharply in the first half, but affordability pressures and rising interest rates have led to a slowdown in the second half. As we move into 2025, the market is shifting in favor of buyers, offering new opportunities for those looking to enter or move within the market.

If you're considering buying, selling, or just want to learn more about the current market conditions, Doyle Spillane Real Estate is here to guide you. Our team of experts can help you navigate the changing landscape and make informed decisions about your property.

Contact us today to get personalized advice on how the market shift could affect you. Whether you're a buyer, seller, or investor, we’re here to help you achieve your real estate goals.

Source: Domain