Home prices across the combined capitals continued to climb over the final quarter of 2024, marking the eighth consecutive quarter of growth for houses and the seventh for units, with prices hitting record highs. This represents the longest period of uninterrupted quarterly growth since 2012-15. Brisbane, Adelaide and Perth ended 2024 with record-high house and unit prices, along with Sydney units. Our housing market has shown remarkable adaptability and strength despite relentless cost-of-living pressures and a cash rate that remained higher for longer than many had hoped. It was our more affordable capital cities and the unit sector in some cities that were the standout performers of 2024; for houses, Perth (19.5%) led gains, followed by Adelaide (14.6%) and Brisbane (10.9%); for units, it was Perth (28.2%), Brisbane (18.1%) and Adelaide (13.6%).
While there was a slight reacceleration in price growth across the combined capitals during the December quarter compared to the previous quarter, a broader slowdown remains clear. Quarterly growth for house prices in the combined capitals has more than halved compared to the same quarter the previous year, while unit growth slowed by about a quarter. This signals the weakest December quarter performance for the combined capitals in two years.
The housing market is now entering a rapid slowdown or decline across all capital cities as affordability challenges, mounting cost-of-living pressures, and limited borrowing capacity take their toll. The market is finally catching up with the financial strain many buyers are experiencing, reflecting a shift in conditions that can no longer be overlooked. All capital cities are now in decline, stable or experiencing a rapid slowdown in growth – they are all past their peak quarterly and annual growth rates, as evidenced by the weakest outcome for a December quarter since 2022 for houses in Sydney, Brisbane and Adelaide, and for units in Sydney, Brisbane, Perth and Hobart. It was the weakest outcome since 2019 for Perth houses and since 2020 for Adelaide units.
The slowdown is largely due to affordability pressures, with rising prices making it harder for many buyers to keep up. Wages haven’t kept up with home prices, and the ongoing cost-of-living squeeze is only adding to the challenge. Many potential buyers are holding off, hoping for a cash rate cut to boost their borrowing power. As demand wanes, supply has been steadily rising – 2024 ended with the highest number of homes for sale for the month of December across the combined capitals in three years, and it’s even more pronounced in Sydney, at a six-year high. This growing choice is contributing to softer clearance rates, properties staying on the market longer, and more price negotiations – clear signs that the market is shifting to favour buyers. The autumn selling season will bring opportunities for buyers.
Victoria
Melbourne house prices increased by almost $16,000 (1.6%) over the December quarter to $1.039 million. It is the first quarterly gain in a year and the largest in three years. Notably, it’s the first time in about four years that Melbourne has recorded stronger positive quarterly growth than Sydney. This improvement has softened the pace of annual decline, with house prices down by almost $11,000 (-1.0%) – making Melbourne the only capital city to record a decline in house prices over 2024. Despite the positive shift over the quarter, Melbourne has struggled to enter a sustained recovery over the past three years, with conditions remaining subdued. The positive change in the final quarter of 2024 means Melbourne house prices are about one-quarter into a recovery, though they remain almost $54,000 (-4.9%) below their December 2021 peak.
Melbourne unit prices increased by almost $12,000 (2.1%) over the December quarter to $577,405. This is the strongest quarterly gain in 1.5 years and brings unit prices to their highest level in 2.5 years. Despite this quarterly reacceleration, annual growth has continued to slow, and has halved compared to the previous year. Units have consistently outperformed houses over the past two years, narrowing the price gap between property types to just over a two-year low. A house now costs 80% more than a unit.
