Australia’s Housing Market Faces Downturn as Prices Dip

CoreLogic’s chief economist, Tim Lawless, noted that this trend sets a “soft start” for the year ahead. The downturn is largely driven by declines in major cities, particularly Melbourne, which has seen significant price drops and is now the third cheapest capital city in Australia.

Conversely, the smaller capitals of Perth and Adelaide are witnessing price surges, with Adelaide becoming the country’s third most expensive capital, boasting a median price nearing $815,000. The report also highlights a distinction between property types, revealing a 3.6 percent increase in apartment values overall for 2024, compared to a 5.2 percent rise for standalone homes.

“The rate of growth is slowing down pretty much everywhere, but there’s still a lot of variance in the statistics,” Lawless remarked.

Mark and Candace D’Souza recently sold their investment apartment in Sydney’s upscale Potts Point neighborhood, forced to adapt to rising interest rates that transitioned from a fixed rate to a significantly higher variable rate in mid-2024. After a decade of ownership, during which they balanced rental income with tax benefits, the couple found the property increasingly unviable.

“The numbers just did not stack up. We would have to dip into our super,” Mr. D’Souza explained. Hoping to sell the one-bedroom apartment for around $850,000, they faced a disappointing reality at auction, where only one bidder showed up. Eventually, after lowering their expectations, they sold the property for $790,000.

Despite this dip, the broader landscape reveals a troubling trend for prospective homeowners. CoreLogic’s Lawless emphasized that while national prices may have fallen slightly, the past few years have exacerbated the challenge of home ownership, particularly for younger Australians.

“We’ve seen extraordinary levels of growth,” he stated, pointing out that housing values in many cities have soared by over 30 percent, with some markets like Perth and Brisbane witnessing increases as high as 70 percent. With incomes lagging far behind these price surges, the dream of home ownership remains elusive for many.

While the D’Souzas expressed disappointment at their sale price, they also reflected on the challenges facing the next generation in breaking into the property market, highlighting the growing divide between property values and income growth in Australia.