Close
Buying & Selling

Is the Australian Property Market Headed for a Correction or continue growth – Realty.com.au Blog

Is the Australian Property Market Headed for a Correction or continue growth – Realty.com.au Blog


Based on the provided sources, the outlook for the Australian property market in 2024 and into early 2025 presents a nuanced picture, showing signs of both continued resilience and growth drivers, alongside potential headwinds that could lead to a levelling off or slowdown in certain segments.

Throughout 2023, the Australian property market demonstrated substantial resilience, with national home prices increasing by a significant 5.5%, surpassing many expert expectations despite surging interest rates and low affordability. This set the stage for an intriguing 2024.

Several key trends from 2023 were expected to shape the market in 2024 and continue to drive growth:

  • A strong rebound in sales volumes commenced in early 2023 and continued throughout the year, indicating increased buyer activity.
  • Limited supply and heightened buyer competition persisted due to low property availability, which contributed to price growth even as new listings increased in major cities like Sydney and Melbourne.
  • Rapid population growth fuelled significant demand, particularly in major capital cities. Hundreds of thousands of new migrants are noted as a factor putting pressure on prices.
  • A shift in buyer preferences towards established housing was observed due to escalating costs of new home builds.

For 2024, the outlook was generally positive, with predictions of a buoyant property market where demand would likely outstrip supply in many areas. Market conditions were seen as promising for both homebuyers and investors, especially with the “very real possibility that interest rates may be heading down by the tail-end of this year”.

However, there are also indicators suggesting a potential change in momentum or a slowdown:

  • More recent data (as of March 2025) suggests housing values are levelling off, adjusting to factors like normalising population growth and affordability challenges.
  • The national property market has shown signs of losing steam amid stalling price growth. Sydney house prices, for instance, fell for the first time in two years in a period covering early 2025.
  • While listings surged in 2024, giving buyers more options than since before the pandemic, increasing stock levels, particularly in Sydney and Melbourne, are putting pressure on prices and creating a potentially tougher road for sellers in 2025. Some locations may even see supply exceed demand, leading to downward pressure on prices.
  • The affordability crisis remains a major challenge, pushing demand for high-quality rental housing and leading to shifts like urban adaptation for multigenerational living. Rising rents are also noted as pushing more people to consider buying.
  •  Record loan sizes ($626,055 average for new owner-occupier mortgages as of July 2024) highlight the high cost of entry.

The role of interest rates is a critical factor. While high rates have impacted affordability, potential RBA rate cuts could provide relief, increase borrowing capacity for renters looking to buy, and bring investors back into the market, potentially increasing supply and slowing the pace of rent increases. Markets were pricing in multiple rate cuts by year’s end in early 2025.

Overall, the sources suggest the Australian property market in 2024 was characterized by continued strong demand, limited supply, and overall resilience, following significant growth in the preceding years post-COVID. However, observations in early 2025 indicate a potential moderation or levelling off in growth rates, with specific areas like Sydney and Melbourne seeing increased stock and potentially tougher conditions for sellers, pointing towards a market adjusting to ongoing economic conditions and supply/demand dynamics. The picture is not a simple correction or uniform continued growth, but rather a complex market influenced by various factors, potentially showing varied trends across different cities and segments.



Source link