House prices rise just 0.1 per cent in weakest result since January 2023, CoreLogic data shows

Australia's national house price growth is weakening, and expected interest rate cuts are unlikely to prevent a fall in house prices next year. CoreLogic's latest data shows that national house prices rose by only 0.1% in the last month of spring, the weakest national growth result in Australia since January 2023. Nevertheless, house prices still grew by 5.5% over the year, with the median house value currently at $812,933 AUD.

Melbourne's house prices have fallen in 10 of the past 12 months, dropping by 0.4% this month, resulting in a 2.3% decrease in house prices over the past year. The situation in Sydney is also not optimistic, with CoreLogic believing that August may have been the peak of this cycle, with house prices falling by 0.1% in October and a further 0.2% in November. Looking at rolling quarters, four of the eight capital cities saw house price declines, with Melbourne leading the decline at 1%, followed by Darwin at 0.7%, Sydney at 0.5%, and Canberra at 0.3%.

Eliza Owen, Head of Research at CoreLogic, stated that while national house prices have grown for 22 consecutive months, this trend is not expected to continue. "This may be the last month of growth we see for a while, as economic conditions continue to put pressure on households and buyer demand is declining," Ms. Owen said. "All indications suggest that a downward cycle is upon us, with four capital city markets now experiencing quarterly declines." As more homeowners and investors consider selling properties, the pace of growth is slowing, with the weakening momentum most pronounced in Melbourne and Sydney.

CoreLogic stated that in the four weeks to November 24, the number of houses and apartments for sale in capital cities increased by 16% compared to the end of winter. Perth (up 33%) and Adelaide (up 25%) saw the largest increases in spring advertising inventory levels. The number of properties for sale in Sydney and Melbourne is now 10.4% and 9.1% higher than the average for the past five years, respectively, reaching the highest level for the same period since 2018. Ms. Owen believes that it is now a better market for buyers than sellers. "Inventory levels are rising, and there are fewer buyers than at the same time last year," Ms. Owen said. "Clearance rates are also falling, which is a good indication of the current state of the property market."

Shane Oliver, chief economist at AMP, pointed out that the affordability of potential homebuyers may be approaching its limit, with a "huge gap" between what buyers can afford and current house prices. "Without rapid interest rate cuts, this gap between buyer affordability and current prices continues to suggest that average house prices are at high risk of falling at some point as savings buffers are depleted, support from the 'bank of mum and dad' diminishes, and unemployment rises," Dr. Oliver said. "The risks here seem to be rising. Support from the 'bank of mum and dad' may continue, but savings buffers for lower-income earners appear to have declined significantly, and a reduction in job vacancies foreshadows a future rise in unemployment, which could also make it more difficult for homeowners struggling with mortgage repayments to make ends meet through overtime."

In this so-called more buyer-friendly market, some people are starting to try selling their homes without an agent. Comedian and actor Brett D'Souza tried to sell his house in the northern Melbourne suburb of Brunswick on his own last year, when house prices started to fall. He said he chose the wrong time to sell and made other "mistakes" in the process, but he would not discourage others considering selling their homes without an agent. D'Souza had hoped to sell the property for $1.8 million AUD. In May 2023, he launched what he called "Australia's biggest house sale," self-marketing through a YouTube series that included comedic skits and mockery of agents. In one video, he described real estate agents as "crooks." When asked months later why he made that assessment, he replied, "The idea of 'undervalue it and watch it rise' is bizarre. Even though underquoting is illegal, it's rampant."

These videos gained D'Souza more followers and ultimately became a promotional vehicle for his comedy career. But it also deterred some serious buyers, with D'Souza saying many people thought the house wasn't really for sale. "Legitimacy was an issue," he told ABC News. "Another thing I did was promote my film-making skills... but to be honest, that probably didn't help with selling the house." In the end, D'Souza had to hire an agent. With the help of an agent, he sold the house for $1.39 million AUD in August. "The expectations were unrealistic," he said, noting that he listed the house for sale when interest rates were rising. "I made some mistakes, but it was too expensive, and I sold at the wrong time." Another mistake he believes he made was not following up with interested buyers. "I think I went too hard on the silly, comedy, film-making thing - 100%," he said. "For anyone wanting to sell their house, I think it is very doable. You just need to do the paperwork, do the follow-up, and make sure anyone that comes through - call them afterwards. The hardest thing about selling a house is cleaning for the open inspection."

D'Souza urged anyone thinking of selling their own home to "do your research" and "price it reasonably." "It's not brain surgery," he said. "Make sure what you want is reasonable. In hindsight, I should have tried to sell a year ago when interest rates were still at 1% - it's very much about timing. The first time I tried to [list the house for sale], I took the photos on my iPhone. That's not a good idea. Get a photographer in, there are plenty of companies that will do that." Regardless of whether people use an agent, CoreLogic's Eliza Owen said she expects house prices to fall next year. Ms. Owen said that expected interest rate cuts later next year will help stimulate buyer demand, but given that "the expectation of rate cuts seems to be pushed further and further out in the near term, I don't see this weakness in the Australian housing market turning around."

Three of the four major bank economic teams now believe the Reserve Bank of Australia will not cut interest rates by 0.25 percentage points until May 2025. The Commonwealth Bank still predicts the first cash rate cut will come in February next year. "I think we'll continue to see falls in house prices across many of the capital cities, with growth slowing in Perth, Brisbane, and Adelaide," Ms. Owen said. "It may be another seven months before we see some improvement in the market." Ms. Owen also pointed out that there is "a lot of uncertainty in 2025 - not just domestic economic conditions, but also geopolitical risks. The threat of trade tariffs, and how that impacts our economy with major trading partners". Currently, Perth continues to lead the nation in capital gains, rising 1.1% this month and 3% over the quarter. However, CoreLogic said this is the weakest three-month rolling period since April 2023, less than half of the 6.7% quarterly growth rate in June.

Brisbane's quarterly growth rate of 1.8% is the slowest since March 2023, while Adelaide's 2.8% gain over the past three months is the lowest since June 2023. Rents are also leveling off. The national rental index continues to show relatively flat growth, rising 0.2% in November and 5.3% over the past 12 months. The annual change in national rents is the smallest since April 2021. A year ago, annual rent growth was 8.1%, while in the two years prior, annual rent growth exceeded 9%.