Chart of the Month - December 2024

National property prices fell for the first time in 22 months in December and was enough to push the December quarter into the red. Capital cities (namely Sydney and Melbourne) dragged the national average down (see chart below). Is this a sign of the vice tightening on Australian consumers and a long-awaited crash? TLDR: No!

Source: Corelogic

Australians aren’t selling under pressure

While property prices have been coming under pressure in the second half of 2024 this is not because the financial pressure has been increasing on the Australian consumer.

Mortgage stress remains high but has actually been decreasing in recent months (see chart below). The household savings ratio increased by 3.2% in the September quarter.

Source: Roy Morgan

Unemployment decreased from 4.1% to 3.9% in November (seasonally adjusted) and the percentage of people with multiple jobs is down from its recent peak in the March quarter.

Further, the RBA is predicting a rise in household consumption over the first-half of 2025 as real incomes rise.

In addition to these feel-good stats, Australian consumers themselves are feeling better with consumer sentiment continuing to rise from recent lows (see chart below).

Source: RBA

Of course, with interest rates high and no immediate cut on the horizon, some Australians are feeling the pressure and are selling. But when they do, 95% are selling at a profit with the median profit continuing to increase and now sitting at AUD 295,000 (see chart below). Of the 5% selling at a loss, the median loss is only AUD 40,000.

Source: Corelogic

But the air is coming out of property demand

‘This result represents the housing market catching up with the reality of market dynamics.” Tim Lawless, Corelogic, research director.

The Australian consumer may be doing better but the demand for property appears to be waning after a strong first half of the year.

In September, the number of new loan commitments for housing fell for all categories compared to August, with the biggest drop for first-home buyers (3.2%). Similarly, auction clearance rates are down for the capital cities (see chart below).

Anecdotal evidence reinforces the story that buyers have been retreating since the Australian Spring.