CoreLogic’s Home Value Index (HVI), published on 2 January 2025, dropped over the New Year’s Holidays with flat results for the overall Australian Housing Market. Still, the growth differed considerably, depending on which capital city or regional area you’ve invested in. However, the data shows that the nation has moved through its peaks, and a national slowdown has arrived as potential buyers await an interest rate cut. The key takeaways from the report are below.

The year 2024 ended the year down 0.1% nationally for December.

Following a peak in October and stable values in November. This decline, recorded on 31 December, also brought the quarterly change to -0.1%, ending a strong growth period from February 2023 to October 2024. This period faced high interest rates, cost-of-living pressures, and limited borrowing capacity. The CoreLogic HVI data has seen interest rate pressure since the second half of 2024.

The most affordable housing in the capital city markets saw the most significant value growth in 2024.

In all the capitals, housing values in the low-end segment increased by 9.8%, while those in the high-end segment only rose by 1.5%.

In annual terms, Australian home values experienced a notable increase of 4.9% in the year 2024, which resulted in an addition of approximately $38,000 to the median value of a typical home across the nation.

Regional housing markets ended the year positively, with values rising 6.0%, compared to a 4.5% increase in the capital index.

The most substantial growth came from regional WA (+16.1%), SA (+12.5%), and Qld (+10.5%). In contrast, regional Victoria and the NT saw declines of -2.7% and -4.7%, respectively.

Three capitals saw declines over the year: Melbourne (-3.0%), Hobart (-0.6%), and the ACT (-0.4%).

In contrast, mid-sized capitals experienced significant growth, with Perth rising 19.1%, Adelaide 13.1%, and Brisbane 11.2%. Despite this double-digit growth in 2024, these markets have likely peaked. Perth's annual change has dropped from a peak of 24.7% in July, Adelaide’s growth slowed from 14.6% in August, and Brisbane's gains peaked at 17.0% in April.

City Growth Leaders

In December, capital city rankings changed, with Adelaide surpassing Perth as the top market. Adelaide's values rose by 2.1%, Perth's increased by 1.9%, and Brisbane's increased by 1.3%.

Why has Adelaide surpassed Perth in growth for the quarter? Tim Lawless: CoreLogic, Executive, Research Director, Asia-Pacific says;

“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.
“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,”
Tim Lawless: CoreLogic, Executive, Research Director, Asia-Pacific

Rental Markets

Rental markets ended the year weakly, with the national rental index rising only 0.1% in December, up 0.4% for the quarter and 4.8% for the year. Mr Lawless noted,

"This was the smallest December quarter rent increase since 2018."

The annual rent change is the lowest since March 2021, after the early COVID downturn. However, the increase remains more than double the pre-pandemic yearly average of 2.0%. The slowdown in rental growth is seen in most major cities and is linked to lower net overseas migration, more people living in larger households, and ongoing affordability issues.

The ACT and Hobart are exceptions, showing rental growth recovery in 2024 after previous declines. Hobart house rents have moved from one of the weakest in 2023 when rents fell -3.6%, to one of the strongest in 2024, with a 6.4% increase.

Tim’s Key Takeaway Points

The final months of 2024 have set the framework for a soft start to 2025.
A lower cash rate is expected to boost housing demand, but it's important not to assume that lower interest rates will lead to significant value growth. Financial markets anticipate a 25-basis point cut by April.
Any changes to the Reserve Bank of Australia's (RBA) macroprudential policies will likely flow through to housing markets—77 basis points in cuts during 2025. As interest rates come down, it is speculated that APRA may adjust the mortgage serviceability buffer to lower, from 3.0 percentage points back to 2.5 percentage points. The November statement from APRA notes the risk of financial shocks has not abated, and regulators have warned that elevated household debt levels are a key vulnerability. We could see APRA implement new macroprudential measures, such as limits on high LVR or high DTI lending if household debt levels increase further as interest rates reduce.
Net overseas migration is expected to wind down further in 2025.
The newly built housing shortage will likely remain a feature of the housing sector through 2025. The good news is that dwelling approvals have moved through a low point, and we could see more announcements from federal and state governments to support residential construction activity.
Housing will become more affordable as value growth stalls and incomes rise. In 2024, housing affordability considerably declined, with the house value-to-income ratio reaching record highs. Mortgage payments and rental costs also became less affordable. However, in 2025, these conditions are expected to improve as income rises faster than housing prices, interest rates drop, and rents stabilize or decrease. A lower cost of living may further support housing demand and help maintain some value in the market in 2025.

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CoreLogic Home Value Index (HVI) 2nd January 2025 report.