Is the Housing Market Finally Cooling Off? Here's the H Real Estate Lowdown on the year that was 2024.
So, the latest housing market numbers are in, and it's a bit of a mixed bag. Overall, house prices across the big cities ended 2024 a little lower than they started. Melbourne and Sydney were the main culprits, pulling the overall numbers down.
Looking closer at December, prices in the top five cities dropped by a tiny 0.2%. But that small drop was mainly because Melbourne saw a 0.7% decrease and Sydney a 0.6% decrease. The other major cities actually saw prices go up.
The last three months of 2024 (Q4) told a similar story. Prices dipped by 0.1% overall, again thanks to Melbourne (down 1.4%) and Sydney (down 1.0%).
Experts at CoreLogic pointed out that the market started strong in 2024 but weakened as the year went on. Basically, everyone was hoping for interest rate cuts, but they kept getting pushed back. This, combined with high interest rates, expensive houses, and the rising cost of living, made things tough for buyers.
Another expert from Westpac added that affordability is a big problem in Sydney and Melbourne, and population growth has also slowed down. The delay in expected interest rate cuts also didn't help.
Now, here's the interesting part: even with the late-year slump, house prices still went up by 5% overall in 2024 across the five major cities. In fact, Melbourne was the only major city to see a price drop for the whole year (down 2.7%).
What's really happening? Well, it seems like the market is finally adjusting. Most people expected prices to fall when the Reserve Bank (RBA) started hiking interest rates. But prices actually went up for a while due to record immigration and a shortage of available homes. This made houses less affordable than ever.
Now that immigration has slowed and there are (in theory) more homes available, the connection between interest rates and house prices is back in play. Basically, prices will probably keep falling until the RBA cuts interest rates, making it easier for people to borrow money and buy homes.
That all said, we are not a major city so how does it effect the Sapphire Coast's market? Well we have to take into account that we live in a rural area where price changes usually lag the major markets, keep in mind that the majority of sales that happen in our region are from outside investors or new commers so their budget is dictated by what they get in these major market, as such the price fluctuations usually follow the major markets by 3-6 months.
What does this mean for the Sapphire Coast in 2025?! Well I wish I had a crystal ball but one thing that you can count on is that as interest rates come back and the market stabilises we will see organic growth return to our market. I expect that we will see flat growth for the next 3-6 months and then 5-8% growth as rolling interest rate reductions occur later in the year.
What are your thoughts?