Nearly two years of national house price growth could soon end as mid-sized capitals and mining regions struggle to overcome falls in major cities.
Property data company CoreLogic posted a 0.1 per cent increase in November, despite the recession gathering pace in Sydney and Melbourne.
“Medium capital cities and most regional markets continue to provide some support for growth in the national index, but it is clear that momentum is also leaving these markets,” CoreLogic research director Tim Lawless said on Monday.
While the average homeowner has benefited from nearly 40 percent of the growth since March 2020, helped by a continued streak of 22 monthly increases, 2025 appears to be shaping up as a buyer’s market.
The weakening housing trend was expected to continue until interest rates were cut, CoreLogic said.
Forecasts for this cut shifted to mid-2025 after core inflation remained above the Reserve Bank’s target range in October.
“Lower cash rates will be a positive for housing markets,” Lawless said.
“A few rate cuts may be enough to support the downward trend in house prices, but it is difficult to see any material upward pressure returning until interest rates fall substantially and affordability barriers are less formidable.”
Home purchases fell in Sydney, with values falling 0.2 per cent in November
Sales conditions deteriorated during the traditionally busy spring season, with more supply and less purchasing activity.
Fewer than three in five auctions in capital cities result in a sale, while private treaty sales take longer.
Buying activity has fallen most in Sydney, where values fell 0.2 per cent in November and 0.5 per cent in the quarter.
That’s half the rate of declines in Melbourne, while small monthly increases in Canberra and Darwin also failed to erase quarterly declines.
Pacers Perth and Adelaide are also slowing, with quarterly increases of 3.0 per cent and 2.8 per cent respectively, the worst in about 18 months.
Mining regions in WA and Queensland are leading the way in these regions, with property values in Mackay, Geraldton and Townsville rising by at least 6.6 per cent this quarter.
Meanwhile, national rents are weakening under the weight of lower population growth, particularly lower net overseas migration, and a gradual recovery in average household size.
Rents rose by 0.2 percent in November and had increased by 5.3 percent over the past year.
Perth saw a quarterly increase of three per cent, according to data from CoreLogic.
Although twice as high as the average of the 2010s, the annual increase is almost half of that in the previous two years.
“All seasonality aside, it looks increasingly like the rental boom is over,” Mr Lawless said.
“A record low in rent affordability is likely to be a central driver of the recovery in household size, with high rents likely to force a restructuring of households as tenants look for ways to minimize their housing costs,” Lawless said.
The tax changes passed by federal parliament last week are also expected to increase the rental stock by as much as 80,000 build-to-rent homes over ten years.
Record low rental vacancy rates have also prompted several state governments to seek a fairer balance between tenants and landlords.
Soon-to-be introduced reforms in NSW will ban warrantless evictions, ban background checks and limit rent increases to once a year.
Proposed changes in Victoria would allow tenants to challenge a rent increase based on its size alone.
That’s after skyrocketing complaints to Consumer Affairs Victoria and the agency saying the rent increases for about 1500 are “excessive” under current law.