Perth house prices: PropTrack data shows first national drop in two years indicating values may have peaked

Australian house prices have fallen for the first time in two years. National house prices were down by 0.17 per cent in December, according to the latest data from PropTrack. However the small decline has done little to curb the market’s overall upward trajectory, with prices remaining 4.73 per cent higher year-on-year. Perth prices have continued their astronomical rise, up 17 per cent overall for 2024 including a 0.39 per cent rise in December. The median house price in Sydney now sits at $1.1m, increasing 37 per cent since the start of the pandemic and about $250,000 more expensive than second-place getter Brisbane. REA Group senior economist Anne Flaherty said a relatively high number of houses for sale across the Australian market giving buyers more choice and time in the second half of 2024, driving the small December dip. “While December was the first month in which national home values declined in two years, price growth momentum had been slowing since March 2024,” Ms Flaherty said. “This slowdown has been seen across both capital city and regional areas, with outperforming markets such as greater Perth also experiencing this trend.” Melbourne and regional Victoria led the downward pressure on house prices in 2024. Values fell 2.5 per cent for the year in the Victorian capital and 2.08 per cent in the state’s regional areas. Melbourne is now the fifth most expensive capital, having been passed already by Adelaide and likely soon Perth. “Melbourne has been Australia’s weakest performing capital city for home price growth since March 2020, with prices up just 13.9 per cent compared to the combined capital city average of 40.2 per cent,” Ms Flaherty said. “Driving Melbourne’s underperformance, Victoria has been relatively more successful at building more homes compared to the other states. “It also continues to see a strong investor exodus due to significant tax deterrents, decreasing demand and driving up supply.” But Sydney and NSW price growth outweighed Victoria, with the capital’s values rising 3.4 per cent across the year and 3.5 per cent in the rest of NSW. “As the only capital city with a median sitting above $1m, affordability remains a significant issue in Sydney, particularly in an environment of persistently high interest rates,” Ms Flaherty said. “This has led to an outperformance in Sydney’s more affordable regions, such as the outer west and south west.” Alongside Melbourne, Darwin was the only other capital to see values fall for the whole of 2024. REA Group and PropTrack analysis deems prices in the rest of/regional Queensland, South Australia and Tasmania are at their peak. Perth prices have also peaked. The REA Group says the lack of an interest rate cut in 2024 counteracted some of the extra cash which stage three tax cuts gave to borrowers. “Contributing to the slowdown – and reversal – of price growth, the number of properties for sale has been relatively high over the second half of 2024, particularly compared to the same period in 2023,” Ms Flaherty said. “This has given buyers more choice and we’re seeing them take more time when purchasing. “While the impact of stage 3 tax cuts which took effect in July bolstered borrowing capacities for some buyers, this has been counteracted by softer economic conditions. “In particular, interest rate cuts that were originally anticipated prior to 2025 have now been pushed back.” Interest rates have remained at 4.35 per cent since November 2023, as the Reserve Bank of Australia waits for inflation to adequately subside. The ASX expects an interest rate cut in April, but the sharemarket has priced in a 67 per cent chance of a cut in mid-February. While regional Queensland house prices are at their peak, there are signs Brisbane house values are beginning to make an affordable turn. Prices in Brisbane ticked down 0.04 per cent in December, for an 11.3 per cent annual increase. The Queensland capital remains the second-most expensive city in the country at $863,000, trailing Sydney by $243,000. The data shows the price of a unit grew above and beyond the price of a stand-alone house in Brisbane last year. “Home price growth has slowed significantly over the past six months in Brisbane, which saw prices fall for the first time in 25 months in December,” Ms Flaherty said. “While prices dipped by just 0.04 per cent over the month, this represents a significant slowdown, with prices still sitting 11.35 per cent higher compared to 12 months ago.”