Sluggish start for home price growth signals more subdued year for property: PropTrack

One capital was the standout performer for house price growth in January, with PropTrack’s latest index signalling a more subdued market in the year ahead.

Property prices in nationally in January rose 0.02 per cent, according to PropTrack’s monthly Home Price Index. Picture: Glenn Campbell

Australia’s property market began the year with a slow start through January, likely marking the beginning of prolonged market moderation.

Continued strong gains in Perth and the regions managed to offset falls in more than half of the country’s capital cities, with property prices nationally rising 0.02 per cent, according to PropTrack’s monthly Home Price Index.

Economic analysts are almost certain that interest rates will remain on hold when the Reserve Bank meets next week after inflation fell to its lowest levels in two years.

PropTrack senior economist Angus Moore said the result sets the tone for the year ahead. “Home price growth has slowed from what we were seeing in the middle of 2023, with national prices relatively unchanged since November,” he said.

“Several factors have contributed to the slowdown, including the additional interest rate rise in November and more homes hitting the market in late winter and spring, giving buyers more choice.

“A more stable interest rate environment, coupled with ongoing population growth and a low level of new building activity, will support home price growth this year … albeit at a slower pace than in 2023.”

Sydney recorded its second consecutive month of price falls through January, down 0.04 per cent, while Melbourne slipped 0.09 per cent. The largest drop of the month was in Darwin (down 0.38 per cent), followed by Adelaide and Canberra, which each lost 0.13 per cent.

Alternatively, the largest change was in Perth, which brought up the national average with gains of 0.5 per cent.

The West Australian capital started the year off strongly after recording the strongest growth of 2023, with prices up 15.45 per cent nationally on the back of a record low number of homes listed for sale.

Brisbane gained 0.17 per cent through January. Hobart was also up 0.09 per cent.

Ray White chief economist Nerida Conisbee said the differing results reflected growth drivers in each city.

“Sydney is far more sensitive to interest rate changes and it is likely that the softer conditions over the past two months reflect this,” Ms Conisbee said.

“Meanwhile, mining conditions in Western Australia and South Australia are not only driving economic growth but also attracting interstate migrants, investors and creating wealth. This is fueling price growth in both Perth and Adelaide.”

PropTrack figures showed regional areas, which rose 0.06 per cent in January, have very slightly outpaced capital cities over the past few months.

Even so, capital city areas remained the stronger performer over the past year.