Price growth slows as buyers gain more options, while rental and construction markets show signs of recovery
Australia’s property market remained resilient in 2024, with national home prices rising every month despite slowing growth amid affordability challenges, increased property listings, and sustained higher interest rates.
Data from PropTrack highlights key trends that shaped the housing and rental markets this year, showing a mixed performance across cities, improved rental conditions, and signs of recovery in building approvals.
Diverging capital city markets
While national prices have climbed, growth has varied widely between cities. Perth, Adelaide, and Brisbane recorded the highest annual price increases at 18.74%, 14.64%, and 12.56%, respectively.
Melbourne, however, saw prices fall for seven of the past eight months, declining 1.63% year-on-year. This downturn caused Melbourne to drop to the fifth most expensive capital city, overtaken by Brisbane, which now ranks second behind Sydney.
“Part of the resilience in the housing market has been the strength in housing demand,” said Eleanor Creagh (pictured above), senior economist at PropTrack. “Strong housing demand has been bolstered by strong population growth which has continued in 2024.”
Supply constraints persist
Despite strong demand, supply issues continue to weigh on the market. High building costs, labour shortages, and chronic under-building have resulted in housing completions per capita reaching historic lows.
Construction activity remains below expectations in most markets, but there are signs of recovery. October saw a 4.4% rise in building approvals, marking the second-highest level in two years and a 6.1% year-on-year increase.
“Although the attrition rate between approval and commencement/completion remains higher than has historically been the case, the uptrend in approvals signals glimmers of recovery off a decade-low base,” Creagh said.
“Further, state and federal governments are focussing on solutions to the housing crisis in a bid to aid rightsizing housing supply and are addressing the barriers hindering home building from approval to completion.”
Rental market stabilises
According to PropTrack, rental conditions have begun to ease in 2024, with vacancies rising and the pace of rental price growth slowing. Increased investor activity has led to more rental properties being listed, while factors such as slowing net migration and larger household sizes among renters have eased demand pressures.
“Although rental market conditions have stabilised with the uplift in vacancy rates over the year, rental markets are still tight,” Creagh said. “Many will remain extremely challenged by poor rental affordability after the significant rental price increase of recent years.”
Sales and listings trends
The number of homes listed for sale surged in 2024, especially during the spring selling season, giving buyers more options. This, coupled with affordability constraints and elevated interest rates, has tempered price growth.
Year-to-date price growth in Sydney slowed to 4.3%, nearly halving compared to 2023, as the balance of power shifted towards buyers. Other capital cities, including Perth, Brisbane, and Adelaide, also experienced a deceleration in price gains during the final months of the year.
Purchasing activity remains robust, with national sales volumes up 9.3% compared to the same period in 2023. However, momentum has eased, with November sales volumes just 3.3% higher year-on-year.
Economic outlook and future trends
Inflation continued to decline in 2024, but not enough to prompt a change in the Reserve Bank of Australia’s monetary policy.
“Conditions warranting rate cuts are unlikely to arise by the first quarter of 2025, with the most likely timing being May 2025,” Creagh said. “As a result, the pace of home growth is expected to continue to moderate, though is likely to remain positive despite the loss of momentum in housing conditions toward the end of the year setting the scene for a tepid start to 2025.
“Once interest rates begin to fall next year, affordability will ease slightly, bolstering confidence and fuelling activity among potential buyers.
“As interest rates move lower in the second half of 2025, rebooting demand, prices are likely to regain traction supported by a more favourable outlook on inflation and interest rates boosting sentiment.”
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