At the same time, sustained high interest rates are clearly biting and creating mortgage stress. This is forcing some sellers to offload their homes.
The still-low number of borrowers in arrears on their loans may be disguising the still-elevated stress levels they are experiencing.
This time last year, there was an expectation that the beginning of interest rate relief was in sight and some stretched borrowers held on.
Similarly, housing investors trying to maximise their profits would be aware that home values were peaking towards the end of 2024. Many investors would also be waiting for interest rates to fall – but there is still no certainty over when the Reserve Bank might hit the button on lowering rates.
Now that prices have begun to pivot, buyers will be expecting better bargains and sellers will be forced to meet the market if they want to deal.
Given prices and interest rates still remain relatively high, housing affordability has not improved, so demand is unlikely to change meaningfully.
Another factor putting a limit on demand is the cost of living pressure that many Australians are currently experiencing. This squeeze on household budgets has made it difficult for first home buyers to save for a deposit.
CoreLogic’s head of research, Eliza Owen, says the buyer pool is becoming exhausted at the same time as the seller pool is growing.
The additional supply of listings should continue to put pressure on prices.
Despite this, most economists are predicting some growth in house prices in 2025 – albeit not as much as the 4.9 per cent rise experienced in 2024.
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They forecast weakness in price gains in the first half of this year, but they believe prices will be supported by interest rate cuts in the second half of the year.
At this stage, the prospects for an interest rate cut in February are firming, but it remains uncertain.
For the moment we should get used to those For Sale signs, those orthodontic smiles and coiffed hair as properties await buyers.
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