A rate cut could come as early as next month, creating a more positive housing outlook. (ABC News: John Gunn)
In short:
House and unit prices grew in regional Australia in January and fell across the combined capital cities.Â
Adelaide recorded the largest jump in value, followed by Darwin, while prices fell the most in Melbourne and Canberra.Â
What's next?
Analysts say falling interest rates could be the catalyst for home prices in some areas to start rising again.
Property prices remained broadly steady across the country in January, according to new data from CoreLogic, largely due to a fall in values in some capital cities.
The value of dwellings in regional areas grew 0.4 per cent last month, but fell 0.2 per cent across the combined capital cities.
Melbourne saw the biggest drop in value (-0.6 per cent), followed by Canberra (-0.5 per cent) and Sydney (-0.4 per cent).
Adelaide recorded the largest jump in values (+0.7 per cent), followed by Darwin (+0.6 per cent), Perth (+0.4 per cent), then Brisbane (+0.3 per cent).
Hobart prices were flat.
"Underneath that headline figure, we're seeing a continued slowdown in the capital city markets, while there's been a lot of regional resilience and values reaching record highs in the combined regional market," CoreLogic head of research Eliza Owen said.
The median price of a unit in Sydney remains high at almost $858,000. (ABC News: John Gunn)
Annually, property price growth has more than halved to 4.3 per cent for the year to February.
Melbourne values dropped the most, by 3.3 per cent in the past 12 months, followed by Canberra (-0.5 per cent) and Hobart (-0.4 per cent).
Sydney gained 1.7 per cent, but that was its lowest annual growth rate since June 2023.
Why is inflation falling?
Photo shows A shopping trolley full of essentials items like fruit, water, and eggs
Rents grew slightly in January, up 0.4 per cent across the country, with all capital cities recording a bump in prices.
But the regions saw the biggest growth, up 1.6 per cent in the three months to February compared with a 0.3 per cent rise across the capitals.
Gross rental yields remained steady at 3.5 per cent across the capital cities and 4.4 per cent in the regions.
Melbourne becomes a buyers' market
Ms Owen said the data indicated some cities were looking better for first home buyers.
"We're still seeing values rise in Brisbane, Perth and Adelaide but there's a clear trend in slowing the pace of growth and overall a gradual transition to a buyers' market, with fewer sales and stock levels starting 2025 higher than where they were at the beginning of last year," she said.
Listings in capital city listings have grown 7.7 per cent over the past 12 months.
She said values had dropped in Melbourne and were currently about 6.5 per cent below their peak.
The median value of a dwelling in Australia is now $814,293. (ABC News: John Gunn)
"This is firmly a buyers' market. That's also reflected in ABS lending data which shows the biggest share of first home buyer finance is going to property purchases in Victoria," Ms Owen said.
"Hobart is also a very strong buyers' market, with values about 12 per cent below the high in early 2022.
"But markets like Adelaide, Brisbane and Perth are much more challenging and are at record highs."
Ray White chief economist Nerida Conisbee said across the country the housing market had "slowed down quite dramatically".
Nerida Conisbee says high interest rates and cost of living pressures were keeping house prices subdued. (ABC News: John Gunn)
"There's a lot of stock out there. Interest rates are high, but this year we are looking at seeing maybe three or four rate cuts, so home loans will also get cheaper to pay off," she said.
Ms Conisbee also said stricter rental controls and new taxes in Victoria had created opportunities for first home buyers.
"In a place like Melbourne at the moment there's lots available at that sub-$750,000 price point in more desirable suburbs," she observed.
"Obviously, a house would be out of reach but apartments are generally available in many suburbs that people really like to live in.
"We are in a little bit of a stable position until those rate cuts come through."
Work-from-home arrangements are continuing to boost regional home values. (ABC News: John Gunn)
Ms Owen said a forecast rate cut in February could stave off a further decline in value.
"A reduction in the cash rate would massively boost consumer confidence. It would increase borrowing capacity, which would put upward pressure on values," she argued.
"The expectation is that any reduction in the cash rate is going to be more helpful than otherwise to boost sale numbers and boost home values."