Melbourne home prices have slipped again, falling to the fifth most expensive capital in Australia after Adelaide overtook the major city in November.   

The latest PropTrack Home Price Index figures showed Melbourne was the only capital city where home price growth declined in November, down 0.07% for the month and 1.63% lower annually.  

It comes as Australia’s median home price grew by 0.15% in November, reaching $800,000 for the first time ever despite higher interest rates, housing affordability challenges and a surge of new properties for sale. 

Nationally, the median home price was 5.53% higher than a year ago, and up 45.8% since the start of the pandemic. 

“Australian home prices hit a new peak in November after 23 consecutive months of growth,” REA Group senior economist Eleanor Creagh said.   

“While housing demand has remained resilient to persistent affordability constraints, we have seen the pace of home price growth slow since earlier in the year.”  

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Home prices across the combined capital cities rose by 5.55% over the past year, just outpacing Australia’s regional areas, which rose 5.48% collectively. 

The capital cities have seen a surge of new listings throughout spring, which has softened price growth from coast to coast.   

“This softening in growth has occurred alongside a surge in stock for sale, giving buyers more choice and reducing the urgency to transact,” Ms Creagh said.  

REA Group senior economist Eleanor Creagh said home prices are expected to lift at a slower pace during the period ahead.

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“However, performance has varied across markets with differing supply and demand conditions.  

“The increase in properties hitting the market this year has been met with strong demand, but increased stock for sale has been a contributor to slowing price growth, along with affordability constraints and the sustained higher interest rate environment.  

“In the period ahead, home prices are expected to lift, though the pace is expected to remain softer trailing the strong growth in prices over recent years.” 

In November, Australia's median home price had grown 45.8% since the start of the pandemic. Picture: Getty

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Smaller capitals still ahead  

Perth, Adelaide and Brisbane remained the strongest capital city markets for annual growth, with prices up 18.74%, 14.64% and 12.56% in the past year, respectively.   

These smaller capital cities have also seen the pace of home price growth slow despite outperforming the rest of the country.  

Hayley Van de Ven, a Brisbane-based real estate agent and principal at REMAX Results – Morningside, said there were signs that the hot Brisbane market was starting to cool.  

“At the moment, days on market are stretching out a little bit,” she said.  

“Open home numbers might not be as high as they were, but the buyers who are coming through are real, genuine buyers. These buyers understand where things are from an affordability perspective, so they’re not just researching, they’re there to buy. 

“Sellers are still confident here too, but I think they might be a little shocked with the extended days on market since the market started to change.  

Brisbane home prices have grown more than 12% over the past year. Picture: Getty

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“Some sellers may take their properties off the market if they haven’t sold by now and then relaunch next year because they don’t want to go into Christmas unsold.”  

Sydney home prices moderate  

Australia’s most expensive property market, Sydney, saw its median home price edge 0.08% higher last month, and grow by 4.55% over the past year.  

Sydney-based real estate agent and director at CobdenHayson Balmain, Matthew Hayson, said the city’s home price growth had been quite modest this year.  

“There's no question a lot of people are selling because they are under some level of financial pressure, but I wouldn’t say they were selling under duress,” he said.  

“A lot of people are selling because they want to simplify their lifestyle given that the cost of living has been weighing on them.  

“Many people are also looking at this market and thinking that it’s a good time to jump up to the next level, if they can afford it, because you’ve got less competition and auction clearance rates look pretty weak.”  

Sydney home prices have increased almost 39% since the start of the pandemic. Picture: Getty

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Melbourne home prices go backwards  

Melbourne home prices have fallen for seven of the past eight months, pushing them 4.38% lower than their March 2022 peak.   

“Price momentum has been weaker in Melbourne over the past four years in part due to greater buyer choice and higher property taxes,” Ms Creagh said.  

“Additionally, construction activity in Victoria has aligned more closely with population growth over the past decade."   

“This recent underperformance in Melbourne has led to the city dropping back to fifth place in the rankings of Australia’s most expensive capital cities, with Sydney, Brisbane, Canberra, and Adelaide now ahead.  

“If current trends continue, values in Perth may eclipse Melbourne next year.”