House prices heading in opposite directions

"Auction clearance rates in Melbourne and Sydney have softened. ANZ Research now expects housing prices in Melbourne will fall 1.7 per cent by the end of this year."

Perth is where demand has been strongly outstripping supply, lifting prices 15.9 per cent so far in 2024. Adelaide and Brisbane have also seen solid growth this year, with prices up almost 10 per cent.

This strength is likely to continue for the rest of 2024. As a result, ANZ Research recently lifted its forecasts for some of these markets, expecting house prices to rise by about 25 per cent in Perth and 15 per cent in Brisbane and Adelaide, by the end of the year.

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ANZ Research sees the very strong price growth in Brisbane beginning to slow a touch from the end of this year. Anecdotal reports suggest it has already become more challenging to sell some of the city’s more expensive properties.

At the other end of the market, Melbourne and Hobart have more properties for sale than there are buyers.

So far in 2024, Melbourne’s housing prices have gone backwards, and ANZ Research is expecting that slowdown to continue in the short term. Prices have eased 1.4 per cent so far this year, and the momentum looks soft.

Auction clearance rates in Melbourne and Sydney have softened. ANZ Research now expects housing prices in Melbourne will fall 1.7 per cent by the end of this year.

Looking further ahead, we think capital city housing price growth nationally will slow to around 5.5 per cent in both 2025 and 2026 as demand moderates. The big question is when, as markets await Reserve Bank of Australia interest rate cuts and the evidence of how that will impact the property markets. Markets that are more sensitive to interest rate cuts – such as Sydney – are likely to benefit from falling rates.

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Madeline Dunk is an Economist at ANZ Institutional

This is an edited extract taken from a conversation on ANZ Institutional’s 5 in 5 Podcast