Australia’s housing market remains a mixed bag, with CoreLogic’s October data revealing subtle but telling shifts. Homeowners and prospective buyers will want to stay tuned as the market navigates affordability pressures and fluctuating values.
Nationally, home values rose by a slight 0.3% in October, capping a 6.0% annual growth rate—down from February’s high of 9.7%. Yet, Sydney’s -0.1% decline marked its first slip since early 2023, while Melbourne also saw a -0.2% dip. In contrast, Perth led with a robust 1.4% monthly increase, showcasing regional variations as affordability challenges shape performance.
Hope for first homer buyers
For first home buyers, the report offers some hope amidst broader uncertainty. The lower quartile of the market across capitals outperformed the pricier segments, recording modest gains or smaller declines. Sydney’s most affordable housing segments rose by 0.5%, in contrast to the -0.6% fall in its upper-tier prices. This trend speaks to the significant role first home buyers and investors play in sustaining demand in more accessible price brackets.
However, affordability remains a key hurdle. The annual growth rate easing to 6.0% may bring some relief, yet it’s tempered by record-high debt servicing ratios and home values relative to income levels that are near all-time peaks. The post-pandemic savings buffer many households relied on is thinning, and economic conditions are softening.
Rising stock levels mean more choice
A notable rise in stock levels is further influencing the market. Listings in Sydney and Melbourne now sit 13% above their five-year averages, giving buyers more choices and potentially easing price pressure. Meanwhile, the mid-sized capitals like Perth and Adelaide are still operating under tighter inventory levels, favouring sellers but showing early signs of balance as advertised stock rises.
Rental markets, a key concern for many prospective homeowners, are experiencing a cooling. National rents increased by just 0.2% in October, the lowest in three years, while unit rents in cities like Sydney and Melbourne saw slight decreases. This easing trend could be a double-edged sword: welcome news for renters, but a potential challenge for landlords facing rising interest rates and maintenance costs.
Rate cuts ahead
Looking ahead, the balance of market forces may shift further. Lower inflation rates hint at potential interest rate cuts in early 2025, which could support borrowing and market sentiment. Yet, the Reserve Bank and regulators remain watchful, with warnings about household debt if credit conditions loosen.
Homeowners and first-time buyers are encouraged to maintain a strategic approach. With higher stock levels and affordability pressures reshaping market dynamics, the next few months could provide opportunities—especially for those seeking entry-level properties in cities with cooling top-tier segments. As always, prudent financial planning and staying informed are key in navigating this evolving landscape.
Monthly change in capital city home values
