Australia’s housing market has shown its first signs of cooling in nearly two years, with national home prices registering a slight decline in December 2024.

According to data from property consultant CoreLogic, home prices across the country dipped by 0.1 percent for the month, marking the end of a prolonged period of consistent growth.

In the major capitals, prices fell by 0.2 percent, with Sydney and Melbourne leading the declines, dropping by 0.6 percent and 0.7 percent respectively.

Meanwhile, Brisbane, Perth, and Adelaide continued to record modest gains.

Tim Lawless, CoreLogic’s research director, attributed the slowdown to affordability constraints, driven by elevated mortgage rates, and an increase in advertised supply.

'Growth in housing values has been consistently weakening through the second half of the year,' Lawless explained, noting that rising interest rates had weighed heavily on buyer demand.

Despite the December downturn, property values for 2024 as a whole rose by 4.9 percent, adding an average of 38,000 Australian dollars to the median home price.

Sydney’s median home value now stands at 1.2 million Australian dollars (approximately 745,680 U.S. dollars).

Overall, the value of land and housing held by Australian households grew by 851 billion Australian dollars in the year to September, reaching a record total of 11.3 trillion Australian dollars, according to government estimates.

The cooling market comes in the wake of aggressive monetary tightening by the Reserve Bank of Australia (RBA), which raised interest rates to a 12-year high of 4.35 percent by the end of 2023.

However, the central bank has recently signaled the possibility of easing monetary policy, with markets anticipating rate cuts in 2025 that could bring rates down to around 3.60 percent.

Lawless cautioned against expectations of a renewed housing boom, stating, 'It will take a lot more than three or four rate cuts to get interest rates back to the pre-pandemic decade average of 2.55 percent.

We don’t expect lower rates to be the catalyst for a renewed phase of strong value growth.'

The slowdown underscores the challenges faced by the Australian housing market as affordability pressures mount.

While some cities continue to show resilience, the overall trend suggests a stabilization of property values after years of rapid gains.

Policymakers and market participants will closely watch how upcoming interest rate adjustments impact housing demand and broader economic conditions in 2025.