Recent slowdown in house prices to be brief and mild
Australian house prices have recorded their first decline in over two years, but experts believe the downturn will be short-lived and moderate.
Eliza Owen (pictured above), head of research at CoreLogic Australia, attributed the drop to a growing affordability gap.
“There’s too much of a gap between where market values are and where people can afford,” she said.
Owen explained that while higher-income buyers and those leveraging profits from property resales had sustained demand in recent years, this segment appears to be losing steam.
“Eventually, even that part of the market runs out of demand, and I think we’re seeing that now,” she said.
Despite the recent slowdown, economists anticipate a return to price growth later this year. ANZ’s latest housing market outlook forecasts a 2.7% rise in capital city home values in 2025, with growth expected to pick up in the second half of the year.
ANZ economist Madeline Dunk described the year as one of two halves, with market weakness persisting in the short term. She noted that the Reserve Bank of Australia’s anticipated rate cuts could provide a boost later in the year.
“We’re expecting the first rate cut in May, but only a very shallow easing cycle,” Dunk said. “We anticipate just two cuts, bringing the cash rate to 3.85%.”
Dunk added that while prices are expected to fall in the first half of 2025, the second half will likely see modest recovery as lower rates take effect.
Price growth is expected to vary significantly by region in 2025. ANZ’s forecast projects stronger performance in cities like Brisbane, Adelaide, and Perth, where growth could exceed 5%. In contrast, Sydney and Melbourne are expected to see much weaker growth, with gains of less than 1%.
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