Insights for Investors and Homebuyers for 2025.
Mortgage Motion understands the complexities and opportunities within the Australian property market.
The latest data from CoreLogic’s Home Value Index (HVI) provides valuable insights for both property investors and homebuyers, highlighting key trends and market dynamics as we move into 2025.
Market Overview
The national home values recorded a slight decline of -0.1% in December 2024, marking the first drop in almost two years. This minor dip reflects the market’s adjustment to high interest rates, cost of living pressures, and reduced borrowing capacity. Despite this, the annual growth in home values was a robust 4.9%, adding approximately $38,000 to the median home value.
Capital City Performance
Among the capital cities, Perth led with a remarkable 19.1% annual growth, followed by Adelaide at 13.1% and Brisbane at 11.2%. However, Melbourne, Hobart, and the ACT experienced declines of -3.0%, -0.6%, and -0.4%, respectively. Notably, Adelaide emerged as the strongest market in the December quarter, with a 2.1% increase in values, surpassing Perth and Brisbane.
Regional Markets
Regional markets outperformed the combined capitals, with a 6.0% annual increase in home values. Regional WA, SA, and Qld were the top performers, with growth rates of 16.1%, 12.5%, and 10.5%, respectively. Conversely, regional Victoria and the NT saw declines of -2.7% and -4.7%.
Affordability and Demand
The most affordable quartile of the market showed the highest growth rates, with values up 9.8% in 2024. This trend is driven by worsening affordability constraints and reduced borrowing capacity, pushing buyer demand towards lower-priced markets. As a result, these areas have experienced stronger growth conditions.
Rental Market Trends
The rental market also saw a slowdown, with the national rental index rising just 0.1% in December and 4.8% over the year. Despite this, rental growth remains more than double the pre-pandemic decade average. However, rental affordability challenges persist, with the median rent consuming a third of the median household income.
Looking Ahead to 2025
As we enter 2025, several factors will shape the property market. A reduction in the cash rate, potential changes to macroprudential policies, and a slowdown in net overseas migration are key trends to watch. Additionally, the ongoing shortage of newly built housing will likely support housing values until a significant supply response occurs.
For property investors and homebuyers, understanding these market dynamics is crucial.
Lower interest rates may boost housing demand, but significant value growth is unlikely without substantial rate cuts. Monitoring regulatory changes and migration trends will also be essential for making informed investment decisions.
While the market shows signs of moderation, opportunities remain for savvy investors and homebuyers.
By staying informed and working with a knowledgeable mortgage broker, you can navigate the evolving landscape and make strategic property decisions in 2025 with Mortgage Motion.
