Australia’s home prices grow at slowest pace since Jan 2025

[SYDNEY] Australian home prices rose last month at the slowest pace since January 2025, weighed down by large declines Sydney and Melbourne, as rising borrowing costs hurt demand.

Every capital city reported weaker growth in April, property consultancy Cotality said in a report on Thursday (Apr 30). The two biggest cities – Sydney and Melbourne – fell 0.6 per cent apiece. Perth was the outperformer, clocking 2.1 per cent growth, while Brisbane and Adelaide recorded rises of more than 1 per cent, the report showed. That left the combined capitals index up 0.2 per cent. 

The national Home Value Index, which includes regional Australia, rose 0.3 per cent in April.

“The housing market was losing momentum from late last year as affordability and serviceability constraints weighed on demand,” said Tim Lawless, Cotality’s research director. “Now we have the additional downside pressure of higher interest rates, sentiment has fallen off a cliff, and rising inflation is set to drive the cost of debt even higher.”

The report comes just a couple of days before the Reserve Bank of Australia is expected to deliver a third consecutive rate hike to take the cash rate to 4.35 per cent as it seeks to rein in inflation. Financial market pricing implies a chance of two further rate rises after that.

Sydney has one of the least affordable housing markets in the developed world, with median prices near A$1.3 million (S$1.18 million). It’s rare for prices in the harbour city to fall – the market saw a brief period of declines between October 2024 and January 2025. Prior to that, it fell 12.4 per cent over the year to January 2023 as interest rates rose from all-time lows.

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Bloomberg Intelligence expects Sydney’s three-year home price rally to end this year, with analysts led by Patrick Wong predicting a 1 per cent decline driven by the RBA’s latest rate tightening campaign. 

The Cotality report showed rents rose another 0.6 per cent in April to be 5.7 per cent higher over the year – the fastest annual pace since October 2024. Sydney remains the most expensive market for renters with the median rate for a house at A$869 per week. BLOOMBERG