SYDNEY (Reuters) – Australian house prices recorded their first monthly decline in nearly two years in December as higher mortgage interest rates increased affordability and more sellers emerged after a long string of gains.
Figures from property consultancy CoreLogic, released on Thursday, showed prices across the country fell by 0.1% in December compared to the previous month, while values in major capital cities fell by 0.2%.
Sydney prices fell 0.6% in December, while Melbourne lost 0.7%. Brisbane, Perth and Adelaide continued to enjoy monthly gains.
“Growth in home values remained persistently weak during the second half of the year, as affordability constraints weighed on buyer demand and advertised supply levels trended higher,” said Tim Lawless, research director at CoreLogic.
Property values are still up 4.9% for 2024 as a whole, adding about AU$38,000 to the median home value, which in Sydney is now AU$1.2 million (US$745,680.00).
The government statistician estimates that the value of land and housing owned by households rose by A$851 billion in the year to September, to A$11.3 trillion.
The market strength over the past two years has surprised policymakers given that interest rates reached a 12-year high of 4.35% in late 2023.
The Reserve Bank of Australia (RBA) recently opened the door to cutting interest rates as early as February, but markets expect only a modest easing to around 3.60% through 2025.
“It will take more than three or four rate cuts to bring interest rates back to the pre-pandemic decade average of 2.55%,” Lawless noted.
“We therefore do not expect lower interest rates to be the catalyst for a renewed phase of strong value growth.”
A Reuters poll in November predicted home prices would rise about five percent in 2025 and 2026, partly due to strong population growth and a lack of new supply.
($1 = 1.6093 Australian dollars)
