January Market Smart: Values Hold Steady
Key Takeaways
- National Home Values Remain Flat – January saw a marginal -0.03% movement in national dwelling values, effectively holding steady. However, capital cities weighed on the result, with a collective -0.2% decline, while regional markets reached new record highs with a 0.4% increase.
- Diverging Capital City Performance – Sydney (-0.4%), Melbourne (-0.6%), and Canberra (-0.5%) all recorded declines, while Brisbane (0.3%), Adelaide (0.7%), and Perth (0.4%) remained in positive territory, albeit with slowing momentum.
- Regional Markets Outperform – Driven by affordability advantages and ongoing internal migration, regional housing values continued to trend upward, particularly in Queensland and South Australia.
- Annual Growth Decelerates – National home values increased by 4.3% over the past 12 months, a significant slowdown from the 9.7% annual peak recorded in early 2024. Melbourne (-3.3%) remains the weakest market, while Perth (17.1%) and Adelaide (12.7%) lead in annual growth.
- Rental Market Relief Emerges – Rental growth showed signs of easing, with national rents up just 0.4% in January. Sydney and Melbourne rents declined over the past six months, reflecting a shift in demand as migration normalises and household sizes increase.
- Easing Sales Volumes – Annual home sales peaked in late 2024 and have since tapered to 526,000 transactions in the year to January, reflecting a moderation in buyer demand.
(CoreLogic, 2025)
Current Market Trends
National Home Values Remain Flat
Australia’s housing market remained largely unchanged in January, with national dwelling values recording only a marginal decline of -0.03%. While this suggests a level of stability, the data reveals a growing divergence between capital cities and regional markets. Across the combined capitals, dwelling values fell by -0.2%, weighed down by declines in Sydney (-0.4%), Melbourne (-0.6%), and Canberra (-0.5%). In contrast, regional markets continued to perform strongly, with values rising by 0.4% to reach new record highs. The affordability advantage of regional areas,
combined with continued internal migration, has helped sustain demand outside the major cities.
(CoreLogic, 2025)
Slowing Growth Across Key Capital Cities
Brisbane (0.3%), Adelaide (0.7%), and Perth (0.4%) were the only capitals to post growth in January, although there are clear signs of slowing momentum. Perth, in particular, has experienced a noticeable shift, with quarterly growth easing from 7.1% in mid-2024 to just 1.0% in the three months to January. Despite this, Perth and Adelaide remain the strongest markets in annual terms, with values rising 17.1% and 12.7%, respectively, over the past year. Brisbane has also performed well, recording a 10.4% annual increase. Meanwhile, Sydney’s annual growth rate has slowed to 1.7%, marking its weakest performance since mid-2023. Melbourne continues to underperform, with values down -3.3% over the past 12 months, the sharpest decline of any capital city.
(CoreLogic, 2025)
Rental Market Shows Signs of Relief
The rental market, which has been under sustained pressure in recent years, is beginning to show signs of relief. National rents increased by just 0.4% in January, following a subdued second half of 2024. The six-month trend in rental growth has turned negative in Sydney and Melbourne, particularly in the unit sector, as migration levels normalise, and household sizes increase. Every capital city recorded at least a modest increase in rents over the month, but the pace of growth is clearly easing. Across regional Australia, rental demand remains stronger, with the combined regionals rental index up 1.6% over the past three months compared to just 0.3% growth in capital city rents. With both rental growth and home values stabilising, gross rental yields have remained firm at around 3.5% in capital cities and 4.4% in regional areas. However, there is potential for renewed downward pressure on yields if rents continue to soften while home values hold steady.
Interest Rate Cuts Could Shape Market Recovery
Looking ahead, the prospect of interest rate cuts could provide renewed support for the housing market in 2025. Financial markets are now pricing in multiple rate cuts from the RBA, with a 95% probability of the first reduction occurring as early as February. By the end of the year, cash rate forecasts suggest rates could fall to between 3.35% and 3.6%. While this would provide some relief to borrowers, interest rates would remain well above the pre-pandemic average of 2.55%. Lower mortgage rates are expected to improve borrowing capacity and sentiment, but affordability
constraints and broader economic uncertainty may temper any immediate resurgence in demand.
Housing Turnover and Listings Increase
Housing turnover has already begun to ease, reflecting the challenges of affordability. The annual volume of home sales peaked at 535,000 transactions in late 2024 but has since fallen to 526,000 over the year to January. This decline in sales activity coincides with an increase in advertised listings, which are now tracking 7.7% higher than a year ago. Buyers are benefiting from improved choice, particularly in Sydney, Melbourne, and Hobart, where stock levels are now well above the five-year average. With more supply on the market and softer demand, price growth is expected to remain subdued in these cities.
Construction Constraints Persist Despite Higher Approvals
Despite an increase in dwelling approvals, particularly for houses in WA, SA, and parts of Queensland and Victoria, new housing supply remains constrained by high labour and material costs. Competition for resources with major infrastructure projects is limiting the pace of new construction, meaning housing shortages will persist in some markets. This imbalance is likely to provide ongoing support for prices in areas where supply remains tight, such as Perth and Adelaide. However, a broader supply-driven moderation in price growth is unlikely in the short term.
Affordability and Economic Uncertainty Remain Key Challenges
As 2025 unfolds, the housing market remains at a crossroads. The potential for lower interest rates presents an opportunity for renewed price growth, but affordability pressures and economic conditions could counterbalance this effect. The supply of new homes remains insufficient in many areas, yet rising listings in some cities are beginning to ease market competition. Investors and homebuyers alike will need to navigate these competing forces carefully, as market conditions are set to remain varied across the country.
