House price growth in Australia’s biggest cities is stalling as cautious buyers pull back in response to shifting interest rate expectations, which looks like it could steady prices in the short term but also squeeze already stretched mortgage holders.
Right now the housing market is entering its usual late year slowdown, but this time the seasonal quiet patch is mixing with rising anxiety about where interest rates go next. The main east coast capitals have led the property upswing since the 2022 tightening cycle began but higher repayments are now biting hard. Many owners are still adjusting to much steeper mortgage costs than they faced a few years ago, while would be buyers are weighing up whether to act now or wait for clearer signals from the central bank.
Recent numbers from a major property data group show the shift quite clearly. Over the past four weeks its daily home price index for Sydney shows no growth at all, while Melbourne manages only about 0.1%. The national preliminary auction clearance rate has slipped to roughly 62.7%, the weakest early read in more than a year and down from around 63.5% a week earlier. Sydney’s clearance rate has fallen to about 58.1% while Melbourne is holding closer to 65.7%. At the same time the total number of homes going to auction is easing, following the usual pre holiday pattern but with an extra drag from softer buyer demand.
The interest rate backdrop is a big part of the story. The central bank has made it clear it is not preparing for cuts and is instead focused on when it might need to lift rates again, which undercuts earlier market hopes for cheaper borrowing in 2025. That change of tone seems to be taking some of the heat out of buyer confidence, especially in larger capitals where prices have pushed many households to the limit of what they are willing or able to pay. Property agencies report that competition at auctions has thinned out since late November, with more bidders deciding to wait and see if conditions improve next year.
For stretched borrowers this environment is tough. Many households are servicing repayments that are significantly higher than before the tightening cycle began and any hint of another hike adds to the pressure. For active buyers the cooling momentum looks like it is opening a brief window of opportunity. Analysts suggest there are plenty of owners who missed their price hopes during the spring selling season and are now keen to secure a deal before the Christmas break, which tends to make vendors more flexible on terms and price.
Beyond Sydney and Melbourne the picture is mixed but still softer than earlier in the year. Preliminary clearance rates in smaller capitals show Brisbane sitting just above 60%, Adelaide closer to 69.7% and Canberra near 59.6%. The overall market still has pockets of strong results including multi million dollar sales and large combined auction events, yet the broader trend seems to be one of gentle cooling rather than a sharp downturn. How long this pause in price growth lasts will likely depend on the next moves from the central bank, wage growth and how buyers and sellers adjust their expectations into the new year.
