As the Australian economic landscape unfolds in 2025, two significant reports have emerged that illuminate the intricate dynamics of the housing market. While headlines may scream of a downturn, the reality is far more nuanced, revealing a sector that remains robust despite recent fluctuations.
First, let’s address the seemingly alarming news: the CoreLogic Home Value Index reported a modest 0.1% dip in house prices for December, marking the first monthly decline in nearly two years. However, to merely focus on this statistic would be to overlook the broader context. This slight decrease follows an impressive 4.9% surge in house prices throughout 2024.
From February 2023 to October 2024, house prices across Australia’s five major capital cities skyrocketed by 16.3%, while unit prices also rose, albeit at a slower pace of 10.2%. The median house price in these cities still hovers just below $900,000. For those who sold their properties last year, the median profit stood at a staggering $295,000, with 95% of sales concluding profitably. These figures underscore a market that has not only endured but thrived, defying expectations during a period when many anticipated declines.
Turning to the supply side, recent data on building approvals has painted a mixed picture. A reported 3.6% decline in November, which fell well below economists’ projections, might seem concerning at first glance. Yet, this figure follows an upward revision in October that reflected a 5.2% increase. Throughout 2024, building approvals have generally trended upward, mirroring a rise in new home sales and indicating renewed market confidence as interest rate hikes have drawn to a close.
Currently, the pace of approvals is tracking at 181,000 annually—outstripping population growth, as noted in an analysis by AMP’s My Bui. However, despite the encouraging trend, the volume of new projects remains insufficient to remedy the pressing housing shortage that continues to plague the market.
Bui succinctly summarizes the outlook: “We expect the housing shortfall to persist throughout this financial year, likely stabilizing house prices in early 2025 before the RBA begins to cut rates.”
In conclusion, while the headlines may reflect a momentary setback, the underlying trends reveal a housing market that is both resilient and evolving. As we venture further into 2025, the trajectory of Australia’s housing landscape remains one to watch closely.
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