The increase Australian home values in November has slowed to a snails pace with economists saying buyers are holding out for an interest rate cut in 2025
CoreLogic’s national Home Value Index (HVI) increased by just 0.1% in the final month of spring, marking the slowest national growth since January 2023. This marks the 22nd consecutive month of growth, though it may be nearing its end in this cycle.
“The downturn is gathering momentum in Melbourne and Sydney,” says Tim Lawless, CoreLogic’s research director.“While the mid-sized capitals, which have dominated the growth cycle of late, are also losing steam.”
Melbourne, where housing values have fallen over ten of the past twelve months, recorded a -0.4% fall over the month, taking values -2.3% lower over the past year.
For Sydney, August likely marked the peak of the cycle, with values flattening in September and falling -0.2% in Octoberand November. On a rolling quarterly basis, seeing four of Australia’s eight capital cities recorded a fall in values, led by Melbourne (-1.0%) and joined by Darwin (-0.7%), Sydney (-0.5%) and Canberra (-0.3%).
Perth continues to lead the nation in capital gains, with values rising 1.1% in the past month and 3.0% over the rolling quarter. However, this is the smallest quarterly increase since April 2023 and less than half the growth seen in the June quarter (6.7%).
Brisbane’s quarterly growth rate has slowed to 1.8%, the slowest pace since March 2023. Meanwhile, Adelaide recorded a 2.8% increase over the past three months, the smallest rise since June 2023.
Regional housing trends have outpaced the capitals, with the combined regional index rising 1.1% over the past three months, compared to just a 0.3% increase in the combined capitals. However, like the capitals, regional areas are showing a mix of results. Regional Victoria saw a 0.9% decline in the rolling quarter, while all other regional areas posted modest increases, led by regional WA, which saw a 3.3% rise.
The weaker housing market has been accompanied by an increase in available supply as vendor activity picked up through spring. Listings in capital cities have risen by 16% since the end of winter. Perth (+33%) and Adelaide (+25%) saw the largest increases in advertised stock, though these figures are still coming from low levels, with overall listings in these cities remaining below average.
Sydney and Melbourne listings are now 10.4% and 9.1% higher than their respective five-year averages, marking the highest levels for this time of year since 2018.
In a note to investors, AMP Capital’s Shane Oliver says, “The housing shortfall is expected to remain significant for a long while yet as building approvals running around 175,000 dwellings a year indicate that completions are likely to run below government objectives for 240,000 pa (or 1.2 million over five years) for some time to come and may never reach that objective. The accumulated shortfall of dwellings in Australia is estimated to be around 200,000 dwellings at least, but if the decline in the average number of people per household seen in the pandemic years is sustained then the accumulated shortfall could be around 300,000 dwellings.”
Oliver also remarked, “Gains have slowed to a crawl with recent months also being revised down by CoreLogic, suggesting that November’s 0.1% gain could be revised down too.”
Meanwhile, purchasing activity is beginning to slow down. CoreLogic estimates that home sales in capital cities over the past three months are 4.6% lower than a year ago and 2.0% below the five-year average. Sydney saw the most significant decline, with sales over the past quarter estimated to be 15.4% lower than last year and 15.1% below the five-year average.
With more supply and less demand, selling conditions have weakened through spring. Auction clearance rates in the combined capitals have remained below 60% since mid-October, and median selling times for private treaty sales are on the rise.
