Home values see first monthly decline in nearly two years

Scott Kuru January 2, 2025 4 min read

KEY POINTS

National home values declined 0.1% in December 2024 - the first monthly decline in nearly two years
In annual terms, Australian home values ended 2024 up 4.9%, adding approximately $38,000 to the median value of a home
While a “soft start” to 2025 is expected, there’s the potential for a rebound in value growth when the RBA starts cutting official interest rates

CoreLogic says its national measure of Australian residential dwelling values, the Home Value Index or HVI, declined 0.1% nationally over the month of December 2024 after peaking in October and holding flat in November.

That means Australian home values finished 2024 up 4.9%.

In dollar terms, that equates to an annual lift of approximately $38,000, taking the national median home value to $814,837.

The details

CoreLogic’s report shows weak ends to 2024 in Sydney (-0.6%) and Melbourne (-0.7%), as well as falls in Hobart and Canberra (-0.5% each), helped drag national home values down by a small 0.1% in December.

CoreLogic says that was enough to also drag quarterly value changes into negative territory, also down -0.1% “to mark the end of what has been a surprisingly strong and resilient period of growth between February 2023 and October 2024 – a period characterised by high interest rates, cost of living pressures and reduced borrowing capacity.”

CoreLogic’s Research Director, Tim Lawless, says the decline in values in December isn’t a surprise.

“This result represents the housing market catching up with the reality of market dynamics,” he says.

“Growth in housing values has been consistently weakening through the second half of the year, as affordability constraints weighed on buyer demand and advertised supply levels trended higher.”

Three of the capital cities recorded a decline in values over 2024: Melbourne (-3.0%), Hobart (-0.6%) and Canberra (-0.4%).

At the other end of the spectrum were the mid-sized capitals, with values in booming Perth surging 19.1% higher over the year, Adelaide up 13.1% and Brisbane values 11.2% higher.

However, CoreLogic’s Tim Lawless says it's clear these markets have passed their peak rate of growth.

Adelaide has also overtaken Perth as the strongest market, with values up 2.1% in the December quarter, compared with a 1.9% rise in Perth values and a 1.3% increase in Brisbane.

“Extremely low advertised stock levels have continued to support strong growth conditions across Adelaide, with stock levels tracking -34% below the previous five-year average in mid-December,” Mr Lawless says.

“Perth, on the other hand, has seen a clear lift in advertised supply, which has provided buyers with more choice and less urgency, supporting a sharper slowdown in value growth relative to Adelaide.”

Some perspective

While values may have inched lower in the final months of 2024, it’s worth looking at CoreLogic’s figures in perspective.

In annual terms, values were up 4.9% in 2024, adding approximately $38,000 to the median value of an Australian home.

And since the onset of the COVID-19 pandemic in March 2020, national home values have soared 38.1%, with homes in Perth and Brisbane growing at an astounding 77% and 67.7% respectively.

Also, when you look at individual cities, there’s a clear divide, with big slowdowns in value growth in more expensive suburbs, while affordable areas continue to boom.

“The most affordable quartile of the capital city markets has shown the highest rates of value growth in 2024,” CoreLogic’s latest report says.

In fact, housing values in the lower quartile of the market were up a whopping 9.8% in 2024, while upper quartile properties rose by only 1.5%.

“With worsening affordability constraints and reduced borrowing capacity, we have seen buyer demand pushed towards lower priced markets, which has, in turn, supported stronger growth conditions in these (affordable) areas,” Tim Lawless says.

Rents

CoreLogic says its national rental index rose 0.1% in the month of December 2024 to be 0.4% higher through the December quarter and 4.8% higher over the calendar year.

“This was the smallest December quarter rise in rents since 2018,” Tim Lawless says.

However, he points out that the annual change in national rents remains more than double the pre-pandemic decade average of 2.0% per annum.

The outlook

CoreLogic says the final months of 2024 have “set the framework for a soft start to 2025.”

“However, as with 2024, we could likely see another year of multi-speed conditions, with the potential for a modest rebound in value growth once interest rates start coming down.”

The data analytics firm also has some good news for those looking to buy property in 2025.

“2024 saw a marked deterioration in housing affordability, with the dwelling value to income ratio equalling record highs, while mortgage serviceability and rental affordability worsened to record levels.

“These metrics should show an improvement in 2025, as income growth outpaces growth in housing values, interest rates reduce, and rents stabilise or even fall,” CoreLogic’s December 2024 HVI report states.

“Lower cost of living pressures should provide some additional support for housing demand and could help to keep a floor under values in 2025.”