Australias housing market just entering a downturn – CoreLogic

After 21 months of growth that pushed values up 14.3%, CoreLogic’s national Home Value Index
(HVI) has finally recorded declines. After peaking in October, the national index steadied in
November (-0.01%) and recorded a -0.1% decline in December. The start of a cyclical
downturn is unsurprising, as monthly home value growth has slowed since June 2024.
The slowdown has been accompanied by other market shifts. Total listings levels across the
country finished 2024 5.0% higher than a year ago. Selling times rose through the December
quarter, up to 33 days from 28 days a year ago.

Home values and interest rates are too high for buyers
Housing demand has slowed amid a growing gap between income, borrowing capacity, and
home values, exacerbated by slowing economic growth and ‘higher-for-longer’ interest rates.
One way to look at this divergence is to consider an ‘affordable’ purchase price for the
median income household in Australia, based on 30% of before-tax income spent on a
mortgage, assuming current interest rates and a 20% deposit. This derived affordable price
would be $513,000, while the national median dwelling value is $815,000
The first notable decline in home values has coincided with a seasonally slow period for the property market, when value changes are usually a little bit weaker. The seasonally adjusted HVI did not actually fall in December, instead rising 0.1%. ​
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Australia’s housing market still looks weaker when accounting for seasonal effects though, and Sydney, Melbourne and Canberra still saw price falls. The national seasonally adjusted HVI has seen monthly growth slow to just 0.1% for the past three months, down from an average growth rate of 0.6% through the first three months of 2024.​