Australian housing: Growth slows

Slower growth ahead

Australian housing: Growth slows


By Mina Martin

Blair Chapman (pictured above), senior economist at ANZ, predicted a slowdown in the growth of national house prices, particularly in major markets such as Sydney and Melbourne.

“We expect capital city housing prices to rise 6% to 7% this year, slowing to 5% to 6% percent in 2025 as population growth slows alongside an increase in available housing," Chapman said.

Persistent supply and demand imbalance

Despite the slowdown, the demand for housing continues to outpace the supply nationally.

“Demand is still outpacing supply nationally,” Chapman said. “Residential construction activity is at very low levels despite strong demand, with population growth remaining elevated.”

This imbalance is exacerbated by a decline in the average size of households, which barely changed in 2023, further straining the housing supply.

Listings and clearance rates

The total market listings are at their lowest since 2009, with a noteworthy decrease in vendor discounting and a subtle drop in auction clearance rates.

The easing of clearance rates, particularly in Sydney and Melbourne, suggests a potential slowing of price growth in these areas, while smaller capitals like Perth, Brisbane, and Adelaide might see continued growth due to lower availability of homes for sale.

Lending trends and financial stability

First-home-buyer loan sizes have stabilised, showing little change this year, yet remain 6.7% higher than in January 2022. Despite this, total lending continues to grow, reflecting an increase in average loan sizes.

Financial stability remains robust, with households maintaining a significant buffer over mortgage payments, though affordability issues persist as the cost of living rises.

Challenges in construction and affordability

Construction activity is not expected to alleviate housing pressures soon, with building approvals near 12-year lows and new building starts at their lowest since 2012.

Financial stability is bolstered by households’ ability to keep up with mortgage payments, but affordability continues to decline, with a significant portion of income now required to service new loans and rents, particularly in regional markets where demand has surged due to the popularity of remote work, the ANZ economist said.

Click here to read the ANZ analysis in full.

Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.

Related Stories

Keep up with the latest news and events

Join our mailing list, it’s free!