Australia house prices rise but growth slows in Sydney and Melbourne, Cotality says

SYDNEY, Dec 1 (Reuters) – Australian home prices jumped in November but gains in Sydney and Melbourne slowed, as expectations there would be no interest ​rate cuts anytime soon undermined sentiment in those already expensive markets, property consultant Cotality said ‌on Monday.

Home prices nationwide increased 1% in November from October to a median value of A$888,941 ($581,990), ‌slightly slower than the 1.1% gain the previous month, according to figures from Cotality, formerly CoreLogic. Prices have risen 7.5% this year.

The rise was driven by smaller state capitals, with Perth surging 2.4% in the month and Adelaide up 1.9%. Prices in Sydney, ⁠Australia’s most populous city, rose ‌0.5%, while in Melbourne they were just 0.3% higher.

The Reserve Bank of Australia has cut interest rates three times this year but an ‍unexpectedly hot inflation report for the third quarter reduced the prospects for any further policy easing. Swaps implied a 50-50 chance of a rate hike at the end of 2026.

Auction clearance rates in Sydney and Melbourne held in the lower ​portion of the 60-70% range throughout the second half of November, below the average ‌for the decade.

“With inflation once again above the RBA’s target range and rates potentially on hold for the foreseeable future, it’s likely housing sentiment will suffer,” said Cotality’s research director, Tim Lawless.

“We can already see the flow-through effect from such stretched affordability and serviceability measures, with growth in housing values skewed towards lower price points of the market.”

The 1% rise ⁠in house prices marked a third straight month of strong ​gains, reinforcing concerns that financial conditions might not be restrictive ​enough to curb inflation given the recent pick-up in credit growth.

The banking regulator announced that it would impose its first cap on high debt-to-income home loans from ‍February, moving to curb ⁠housing risks.

“The gains are likely to slow in 2026 as a result of poor affordability, the less favourable outlook for interest rates with the risk of a rate hike and ⁠APRA moving to ramp up macro prudential controls and likely to do more,” said Shane Oliver, chief economist at ‌AMP.

($1 = 1.5274 Australian dollars)

(Reporting by Stella Qiu and Sam McKeith in ‌Sydney; Editing by Michael Perry and Edmund Klamann)