As Australian housing prices drop, first homebuyers could be in for a win. But, as always, there’s a catch

‘Further falls in house prices could well be seen in most, if not all, states and territories for at least the first half of 2025 and possibly much longer if prevailing economic conditions were to turn further south,’ writes Nicki Hutley. Photograph: Lisa Maree Williams/Getty Images

Australians like to reference the idea that house prices only ever go in one direction: up. For those lucky enough to have stepped on to the home ownership merry-go-round, they’ll wonder at how their home has appreciated so much over the past five, 10, or 20 or years. But for those still renting, they’ll most likely be lamenting how they may never get a foot in the door – both figuratively and literally.

Rapidly rising house prices is not a new phenomenon in the majority of cities in Australia. Over the 20 years from 1980 to 2000, average house prices increased by 225%, according to CoreLogic data. Over the following 20 years, they increased by another 200% and have notched up a further astounding 40% in just the last four years, thanks to ultra-low interest rates and the failure of supply to keep up with demand.