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Home prices hold firm in January as rate cuts await

Profile photo of Andy Webb,  Editorial Writer at OpenAgent

Written by 

Andy Webb.

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After 2024 ended with the first national property price decline in nearly two years, things steadied in January as home values held flat.

With some markets still setting record highs and others having hit a plateau, all eyes will be on the Reserve Bank of Australia (RBA) in February to see if interest rates will finally be cut. 

Find out how the coming months could unfold for Australian real estate.

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Australian property prices: January 2025

The national median property price was unchanged in January according to CoreLogic's latest report, although there was still up-and-down movement across different markets.

MarketMonthQuarterAnnualMedian value
Sydney-0.4%-1.4%1.7%$1,193,228
Melbourne-0.6%-2.0%-3.3%$772,317
Brisbane0.3%1.2%10.4%$893,592
Adelaide0.7%1.8%12.7%$819,363
Perth0.4%1.0%17.1%$809,870
Hobart0.0%-0.8%-0.4%$658,180
Darwin0.6%1.7%0.9%$502,632
Canberra-0.5%-0.5%-0.5%$850,534
Combined capitals-0.2%-0.7%3.8%$897,632
Combined regional0.4%1.0%5.8%$656,445
Australia0.0%-0.3%4.3%$814,293

Gradual declines continued for Sydney and Melbourne, dipping -0.4 and -0.6 per cent respectively for the month.

The pace of growth also kept easing for Brisbane, Adelaide and Perth, with all three markets remaining at all-time highs. 

Hobart held level, Darwin got a +0.6 per cent boost, and Canberra dropped -0.5 per cent, though all three of the smaller capitals were relatively flat on an annual basis. 

Regional markets continued to outperform their capital city counterparts in January, particularly in SA and WA where monthly gains were above 1 per cent.

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Three key takeaways from the current market

With 2025 now in full swing, a number of changing dynamics have emerged in our property markets. Here are a few of the headline trends worth following. 

Growth has been trending downward in all markets

After some prosperous years for Australia's real estate markets, a widespread cooling led to a national decline at the end of 2024. 

CoreLogic's report points out that the annual rate of growth around the country has more than halved over the past year, from 9.7 per cent in February 2024 to 4.3 per cent in January 2025. 

Even the three strongest markets of 2024 — Perth, Brisbane and Adelaide — have all seen a marked slowdown over the past six months, particularly the WA capital. 

"Perth is now recording a slower rate of growth than Brisbane and Adelaide over the rolling quarter," CoreLogic's research director Tim Lawless said.

"In the June quarter of 2024, growth in Perth home values was 7.1 per cent, easing back to just 1.0 per cent growth in the three months to January."

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The country's 'shallow downturn' could be halted by rate cuts

While prices are dipping in some markets and others are cooling off, the slowdown may be short-lived.

The latest inflation figures show an unexpectedly sharp drop, leading many economists and market analysts to strongly suggest we could see interest rate cuts begin in February. 

"Lower mortgage rates and a subsequent lift in borrowing capacity as well as an undersupply of newly built housing could be setting the foundations for a relatively shallow housing downturn," Mr Lawless said.

He warned that the rate-cutting cycle is likely to be slow and drawn out, and other factors like poor affordability and slowing population growth mean we shouldn't expect another major housing boom any time soon. 

"All things considered, the likelihood of a significant growth cycle over the coming year remains low."

Regional markets remain resilient against cooling trends

For most of 2024 and now moving into 2025, regional markets have been outperforming their capital city counterparts. 

As of January 2025, the combined regions are still hitting record high prices as slow and steady growth continues. 

Mr Lawless noted that "Regional markets seem to be benefitting from a second wind of internal migration, along with an affordability advantage in some markets, and what looks to be some permanency in hybrid working arrangements across some occupations and industries."

Looking ahead, regional property markets may continue to hold firm, particularly in lifestyle-rich areas and those with strong infrastructure investment, but the days of rapid, double-digit price growth are likely behind us for now.

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What's next for Australian property? 

Outside of the usual market forces, there are two major factors that will come into play over the next few months. 

The first is how the RBA reacts to the latest inflation data. With many economists forecasting a first rate cut to come in February, there could be an injection of confidence and activity among buyers. 

The second is the upcoming federal election which will need to take place by May 17th. 

The calling of a federal election typically slows the market for a period as some buyers and sellers wait on the sidelines until the future becomes clearer. Anyone looking to transact within the first half of the year should keep a close eye on potential election dates and plan accordingly.

Beyond these two near-term events, Australian property prices have some ongoing factors influencing progress. 

The rate at which new homes are being built is still below where it needs to be, creating a widespread housing shortage after two years of historically high population growth. 

Immigration is set to be reduced in 2025, though, easing that level of demand over the longer term. 

Overall, conditions appear to be relatively balanced. If rates are cut in February, we may see an increase in buyer activity, although CoreLogic cautioned that "we aren’t expecting any material rise in home values until interest rates return closer to the pre-pandemic average and affordability improves further."

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