Domain’s December 2024 House Price Report, analysed by Dr Nicola Powell, Chief of Research, provides key insights into the dynamics across capital cities.
While some markets celebrated milestones, others grappled with affordability, rising supply, and cautious buyer behaviour, as shown in Domain’s graph below.
Brisbane: hitting the million-dollar milestone
Brisbane achieved a significant milestone, with its median house price surpassing $1 million for the first time.
The city recorded its eighth consecutive quarter of house price growth, with a 1.3% increase in the December quarter.
Annual house price growth stood at 3.5%, while unit prices rose by 2.6% over the year.
“Brisbane’s rise to the million-dollar club is remarkable, but even here, momentum is slowing, with quarterly growth halving compared to the same period last year,” said Dr Powell.
Supply rose by 10% year-on-year, contributing to a more balanced market, but Dr Powell said some buyers are holding off, awaiting potential rate cuts to enhance borrowing capacity.
Sydney: a tale of two markets
Sydney showcased a split market, with house prices declining by 1.4% in the December quarter, while unit prices held steady.
Annual growth for houses was limited to 1.5%, compared to 3.9% for units, as affordability pressures pushed buyers towards more affordable housing options in the west and southwest.
Dr Powell said Sydney’s supply jumped 19% year-on-year, reaching its highest December levels since 2018. This influx of listings sets the stage for a favourable autumn buying season.
“Affordability remains a critical factor, with units and more affordable suburbs outperforming high-end markets.”
Melbourne: a quiet comeback
Melbourne surprised many with a modest 0.7% quarterly increase in house prices, while unit prices remained unchanged.
Annual house price growth was 0.6%, and units rose by 1.9%.
Dr Powell attributed this growth to first-home buyers taking advantage of subdued pricing and owner-occupiers upgrading to suburbs that have become more affordable.
“Melbourne’s value has been building, and savvy buyers are seizing opportunities.”
However, she cautioned that growth is expected to remain subdued in 2025.
Adelaide: steady growth and low supply
Adelaide continues to be a standout performer, with house prices rising by 1.5% in the December quarter, bringing the annual growth to 6.2%.
Unit prices saw even stronger annual growth, rising by 8.7%. Adelaide’s median house price is now on the cusp of reaching $1 million, a milestone expected in early 2025.
What sets Adelaide apart is its constrained supply, which remains 9% lower than a year ago, the only capital city with a year-on-year decline in listings.
“Adelaide’s supply shortage has sustained its price momentum, making it one of the most resilient markets in Australia,” Dr Powell noted.
National trends and outlook
Across the combined capitals, house prices rose by 1.1% in the December quarter, with annual growth at 4.7%.
Units edged up by 0.4% for the quarter, with an annual increase of 5.6%. Supply increased nationally by 12% year-on-year, reaching its highest December volume since 2021.
However, rising supply is tempering price growth across most markets.
Dr Powell anticipates a subdued start to 2025 as affordability challenges and cautious buyer behaviour continue to shape the market.
However, potential rate cuts later in the year could spur demand and lift consumer sentiment.
“If rates are reduced and inflation stabilises, we could see stronger market dynamics towards the end of 2025,” she said.
In summary of the report, Dr Powell explained: “The housing market has slowed significantly across all capital cities, with affordability issues, rising living costs, and limited borrowing power all taking their toll. The market is finally catching up to the financial pressure many buyers have been facing.
“At the moment, many potential buyers are holding off, hoping for a cash rate cut to improve their borrowing power. As demand decreases and more homes come onto the market, we’re seeing a shift in
dynamics that can’t be ignored.”
2024 ended with the highest number of homes for sale for the month of December in the combined
capitals in three years, setting the foundation for more options during the Autumn season.
“This has led to softer clearance rates, longer time on the market, and more opportunities to negotiate on price. Overall, the market seems to be moving towards a buyers’ market, which could offer better conditions for those looking to purchase property this year.”
