(Bloomberg) — Australian home prices rose at their weakest pace in nearly two years, led by falling prices in the key markets of Sydney and Melbourne as mounting affordability concerns sour buyer demand.
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Sydney fell 0.2% in November from the prior month — its second straight monthly decline, property consultancy CoreLogic Inc. said Monday. Melbourne, where values have fallen in 10 of the past 12 months, slipped too as prices in major cities rose just 0.1% in November. That’s the slowest pace of growth since February 2023.
“The downturn is gathering momentum in Melbourne and Sydney,” said Tim Lawless, research director at CoreLogic. “While the mid-sized capitals, which have dominated the growth cycle of late, are also losing steam.”
CoreLogic’s estimate of capital city home sales over the past three months is 4.6% lower than a year ago. The largest drop in the volume of home sales has been in Sydney, where sales over the rolling quarter were estimated to be 15.4% lower than a year ago.
“With more available supply and less purchasing activity, selling conditions have deteriorated through spring,”CoreLogic said. “Alongside the uncertain economic outlook, housing markets are likely to be arriving in 2025 on a relatively weak footing.”
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Higher interest rates, a shortage of homes and booming population growth have triggered a housing crisis in large parts of Australia. The problem is particularly acute in Sydney where buyers are being priced out of the market given an average home costs 13-times income. That has fueled growth in the lower quartile of the market, with apartments outperforming houses, CoreLogic said.
The rate of growth in rents has slowed too, to 5.3%, from 8.1% a year ago.
“Beyond any seasonality, it looks increasingly like the rental boom is over,” Lawless said.
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