HOUSING MARKET 2024
- What’s the outlook for property markets for the rest of 2024?
- Have interest rates peaked now and when will they start coming down or will the RBA raise rates again in 2024 because of stubbornly high inflation?
- Will affordability issues cause a round of distressed sales and price falls or even a property market crash in 2024?
It is now clear that our housing market has defied the many doomsday forecasts and has moved through the bottom of the cyclical downturn early in 2023 – 24 experiencing a V-shaped recovery making the 2022 downturn one of the sharpest but shortest ones in history.
The price upturn is now firmly entrenched, rising for 24 months in a row and with home prices hitting fresh record highs in many markets .
Meanwhile, auction clearance rates seem to be delivering consistent results showing the depth of major capital city housing markets and the year has started with increasing buyer sentiment – in fact some FOMO (fear of missing out) is creeping in as house prices reach new peaks.
Auction results and consumer sentiment have both shown a historically strong relationship with future housing trends.
Of course, each state is at its own stage of the property cycle and within each capital city there are multiple markets.
While some regional areas outperformed the capital cities, the price upturn in last year and regional areas had slower growth.
Overall, persistently low supply relative to demand are supporting arising housing values despite high interest rates, ongoing cost of living pressures, worsening affordability pressures and a deeply pessimistic level of consumer confidence.
The gap between capital city house and unit values has widened and substantially.
Capital city house values of almost 3 times as much as unit values since the lowest period of Covid… but the gap is narrowing across most cities.
Unit prices recorded stronger growth for much of 2023 into 24 and are still growing strongly this year as affordability constraints will mean more Australians trade backyards for balconies and courtyards.
Big four banks forecast
ANZ have recently revised their forecasts and expect capital city housing prices to rise 7.3% in 2024, but the state by-state picture is quite varied. Price outcomes will continue to be largely driven by the gap between supply and demand. Looking further ahead, ANZ think capital city housing price growth will slow to around 5.5% in 2025 as demand moderates.
CBA expects capital city prices to lift 5 per cent, with small variations across the cities. Brisbane is tipped for 6 per cent growth, Melbourne and Perth for 5 per cent, Sydney for 4 per cent and Adelaide for 1 per cent.
WESPAC forecasts 6 per cent growth across the combined capitals. Perth is pencilled in for the highest growth at 10 per cent, followed by Brisbane at 8 per cent, Sydney at 6, Adelaide at 4 and Melbourne at 3
You can always beat the averages.
NAB predicts prices across the capitals to rise an average of 5.4 per cent. Prices are expected to lift 6.5 per cent in Brisbane, 6.2 per cent in Perth and Adelaide, 5.5 per cent in Melbourne and 5 per cent in Sydney. Hobart values are expected to end the year flat.
You can always beat the averages.
Now by that, meaning look for the next hotspot.
Buying quality properties in locations that will outperform in the long term such as gentrifying suburbs.
Property offers countless opportunities to improve your results through your own time, skills and knowledge – so you don’t need to settle for average.
And there’s more to it than just location. You can add value through refurbishment, or redevelopment, knowing of possible R Code changes, future infrastructure by state government, shire town planning or concessions + subdivision or ancillary additional dwelling options.
Oxford Economics recently made the following forecasts of where house prices will be in 3 years time.
INTEREST RATES
How can values continue rising amid high interest rates?
Clearly affordability has decreased, but the housing markets are being underpinned by a number of factors:
- Wealthy buyers entering the market with higher deposits.
- Downsizers who had a lot of equity in their homes are buying debt free – in fact a third of properties last year were transacted with no mortgage at all.
- The bank of mum and dad and inheritances are helping many buyers with a deposit.
- Some buyers are buying in cheaper markets while others are buying units rather than houses.
- The property room of 2020-21 left many homeowners with significant equity in their homes.
LATEST MARKET STATS
Here are the latest stats provided by CoreLogic for property price changes around Australia:
| City | Month | Quarter | Annual | Total return | Median value |
|---|---|---|---|---|---|
| Sydney | 0.3% | 1.1% | 5.6% | 8.8% | $1,174,867 |
| Melbourne | -0.4% | -0.9% | 0.2% | 3.9% | $781,949 |
| Brisbane | 1.1% | 3.8% | 16.0% | 20.6% | $873,987 |
| Adelaide | 1.8% | 5.0% | 15.5% | 20.2% | $776,597 |
| Perth | 2.0% | 6.2% | 24.7% | 30.6% | $773,335 |
| Hobart | -0.5% | -0.8% | -1.2% | 2.8% | $646,863 |
| Darwin | -0.2% | -0.3% | 2.3% | 8.8% | $507,097 |
| Canberra | 0.0% | 0.5% | 1.7% | 5.8% | $870,910 |
| Combined capitals | 0.5% | 1.8% | 7.9% | 11.8% | $884,412 |
| Combined regional | 0.4% | 1.3% | 6.9% | 11.6% | $630,565 |
| National | 0.5% | 1.7% | 7.6% | 11.8% | $798,207 |
Source: CoreLogic 1st August 2024
In fact, all the research houses reported higher dwelling prices in July 2024:
- National home values rose 0.5% in July, the 18th consecutive monthly increase in home values nationally. Core Logic records show has gained 13.5% and values have consistently pushed to new record highs since November last year.
- Pro Track reported national home prices lifted 0.18% to a new peak in June, despite recording the slowest pace of monthly growth since December 2022. Prices are up 10.14% from their December 2022 low, lifting 3.14% year-to-date to sit 6.55% above June 2023 levels.
- Dr Andrew Wilson’s My Housing Market reported that house prices were higher again over July with segments of the national market continuing to report clearly robust results – although half the capitals reported lower prices over the quarter. The national capital city median house price again increased by 0.4% to $1,141,987 over the July quarter compared to the June quarter.
We also keep track of “Asking Prices” as these are a good leading indicator for the property market because they reflect the sentiment of sellers and their expectations for the future value of their homes.
SYDNEY Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,918,469 | 7.280 | -0.3% | 5.5% |
| All Units | 821,800 | 0.200 | -0.4% | 9.3% |
| Combined | 1,475,240 | 4.418 | -0.3% | 6.0% |
Source: SQM Research, August 2024
MELBOURNE Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,236,078 | -3.178 | -0.2% | 4.6% |
| All Units | 608,802 | -0.302 | -0.4% | 3.8% |
| Combined | 1,039,481 | -2.277 | -0.3% | 4.2% |
Source: SQM Research, August 2024
BRIBANE Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,156,397 | 10.497 | 3.5% | 18.3% |
| All Units | 643,555 | -1.355 | 2.1% | 21.2% |
| Combined | 1,028,428 | 7.540 | 3.3% | 18.6% |
Source: SQM Research, August 2024
PERTH Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,055,209 | 6.407 | 2.8% | 24.4% |
| All Units | 546,975 | -0.552 | 0.2% | 20.8% |
| Combined | 922,755 | 4.594 | 2.4% | 23.7% |
Source: SQM Research, August 2024
ADELAIDE Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 936,081 | 1.372 | 2.2% | 20.6% |
| All Units | 464,583 | -3.933 | 1.8% | 8.1% |
| Combined | 851,460 | 0.420 | 2.2% | 19.2% |
Source: SQM Research, August 2024
CANBERRA Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,182,682 | -13.932 | -2.3% | 8.2% |
| All Units | 575,451 | -1.326 | -1.8% | -3.8% |
| Combined | 960,829 | -9.327 | -2.2% | 5.0% |
Source: SQM Research, August 2024
DARWIN Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 647,748 | 1.252 | -2.1% | -3.7% |
| All Units | 382,512 | 0.821 | 0.8% | 1.6% |
| Combined | 543,623 | 1.083 | -1.3% | -2.3% |
Source: SQM Research, August 2024
HOBART Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 787,096 | 0.449 | 0.8% | -1.9% |
| All Units | 382,512 | 0.821 | 0.8% | 1.6% |
| Combined | 741,653 | -0.206 | 0.0% | -2.0% |
Source: SQM Research, August 2024
NATIONAL Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 933,872 | 2.716 | 1.3% | 8.5% |
| All Units | 557,988 | 0.412 | 0.6% | 9.0% |
| Combined | 853,243 | 2.222 | 1.2% | 8.5% |
Source: SQM Research, August 2024
CAPITAL CITIES Property Asking Prices
| Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
|---|---|---|---|---|
| All Houses | 1,388,930 | 2.790 | 0.7% | 9.3% |
| All Units | 691,969 | -0.665 | -0.6% | 9.3% |
| Combined | 1,183,333 | 1.771 | 0.5% | 9.1% |
Source: SQM Research, August 2024
**PERTH is the most variable state in Australia.
PROPERTY PRICES FUNDAMENTALS
The fundamentals of what drives Australia property prices. Property prices are driven by a combination of factors, and as we move through property cycles. They all come together to influence whether property values rise or fall.
In the medium term, property values will be linked to a range of factors that tend to boil down to two basic economic concepts:
“consumer confidence + supply and demand.”
Understanding how these concepts work together to affect real estate is crucial to one’s understanding of what’s ahead for our housing markets.
On the other hand, if you look at what’s ahead for housing markets over the next decade or two, and take a telescopic view, rather than a microscopic view, the two big factors driving our housing markets will be demographics (how many of us there are, have we want to live and where we want to live) and the wealth of the nation.
But first, let’s dig a bit deeper into the key underlying factors that will be influencing our property markets in the medium term.
1 : INTEREST RATES + AFFORDABILTY
While many people believe interest rates are a key driver of property values, and that’s why there were so many pessimistic property forecasts as interest rates rose through 2022-23, our housing markets showed considerable resilience and kept rising in value despite the 13 interest rate rises the RBA threw at us.
Of course, falling interest rates and the subsequent increased affordability are strong drivers of property price growth, but the reverse isn’t true.
House prices are driven by many other factors, not just interest rates.
However it is now lear that rates will remain high for longer as inflation remains stubbornly high and our economy and labour markets keep performing better than the RBA would like.
Economists are divided on the timing and number of RBA rate cuts with many now suggesting the first rate cut will happen in the second quarter of 2025.
However, the difference between no rate cuts, and up to three rate cuts, has a huge impact on borrowers, particularly for those with large debts compared to their incomes.
Current big four bank cash rate forecasts
The RBA has kept the cash rate on hold since late last year, and the big four bank economic teams have all cast their predictions for the next series of cash rate movements:
- CBA expect 5 x 0.25% rate cut starting in November 2024
- Westpac is forecasting 4 x 0.25% rate cut starting in February 2025.
- ANZ expects 3 x 0.25% rate cut starting in February 2025
- NAB forecasts 5 x 0.25% rate cut starting in May 2025
2 : SUPPLY and DEMAND
Housing supply has a significant influence over house prices in the short term: an undersupply puts pressure on prices to rise while an oversupply does the opposite.
Despite very strong population growth through 2023, we’re just not building enough new dwellings, and this has put pressure on housing supply reflected in low rental vacancy rates and higher house prices.
At the same time, the strong absorption of new listings for sale has kept total listings in the market suppressed, intensifying competition between buyers.
These factors have created a sharp shortage of housing, outweighing the negative impact of rates on prices.
And there is no end in sight as building approvals (which are a good indication of future supply) are running at very low levels.
And just because a new apartment complex has been approved, it doesn’t mean it will get built.
At the moment very few new complexes are coming out of the ground because it’s not financially viable to build them at today’s market prices.
Of course, this means future new developments will have to sell at prices considerably higher than today’s market value and this will, in turn, pull up the value of established apartments.
3 : CONSUMER CONFIDENCE
Consumer confidence is a critical factor affecting the direction of property prices.
We won’t make big financial decisions like moving home or buying an investment property unless we feel confident about our economic future and our financial stability.
2023 was a year where consumer confidence was at historic lows because of all the economic and socio-political issues that confronted us.
Many industry experts believe that during 2024 consumer confidence will rise as inflation slowly comes under control and we realise interest rates have peaked and are going to eventually fall.
At the same time, the “wealth effect” a very improving economy and rising property values will lead to further consumer confidence and bring home buyers and sellers back into the market.
4. ECONOMIC CLIMATE
Another key factor that affects the value of the property market is the overall health of the economy.
This is generally measured by economic indicators such as the gross domestic product (GDP), employment data, manufacturing activity, the prices of goods, etc.
Broadly speaking, the economy is strong and the RBA is trying to slow it down to bring inflation under control, but currently, everybody who wants a job can get a job and this will underpin our housing markets even if the economy falters a little moving forward.
5. POPULATION GROWTH
Australia has experienced a record-breaking rate of net overseas migration. estimated to have reached 500,000 people in the last 15 months to July 2024.
While population growth has always been a key driver supporting our property markets, the influx has pushed our supply/demand balance off-kilter and is key to the increase in housing prices and the shortage of rental properties.
6. AVALABILTY of CREDIT
When the credit (the ability to borrow from the banks) is readily accessible, with lower interest rates and less stringent lending criteria, it tends to stimulate the housing market since more people find themselves able to borrow money to buy homes, leading to increased demand for housing.
On the flip side, when credit is tightened through higher interest rates or stricter lending criteria (as happened when APRA made the banks tighten the purse strings in 2016-7), the effect can be a cooling of the housing market.
Such measures are usually a deliberate policy response to an overheated market, aiming to reduce the risk of a “property bubble” and subsequent crash.
7. INVESTOR SENTIMENT
This sentiment, essentially the collective attitude and outlook of investors towards property markets, can significantly influence both the demand for and the value of real estate.
Investors generally account for around one-third of all property transactions so positive investor sentiment can drive up property prices, especially in sought-after areas.
Conversely, negative investor sentiment, as occurred during the market downturn of 2022, can lead to a decrease in property values.
If investors believe that property prices will stagnate or fall, they may be less inclined to invest, or they might choose to sell off their properties, increasing supply in the market.
8. GOVERNMENT INCENTIVES
Government incentives can have both direct and indirect impacts on the real estate sector.
One of the most direct ways government incentives affect property values is through policies aimed at stimulating demand.
For instance, initiatives like the First Home Owner Grant (FHOG) or stamp duty concessions for first-time buyers directly increase buying capacity, leading to greater demand for property.
Another aspect is the development incentives provided by the government to promote specific types of property development, such as high-density housing or urban renewal projects.
These incentives can increase property values in targeted areas by improving infrastructure, accessibility, and community facilities, making them more desirable places to live.
Tax policies and regulations also play a crucial role.
Negative gearing can increase demand for investment properties, pushing up prices.
And every time there is talk about removing negative gearing or amending taxes including land tax, investors shy away from our housing markets.
Australian housing market predictions for 2024
The last few years have shown us how hard it is to forecast property trends, and as always there will be headwinds and tailwinds buffeting our property markets.
Currently Australia’s housing is so undersupplied that I’ve rarely encountered a supply-demand inflection point like this that requires such attention.
And it’s only going to get worse.
Drivers of property price growth in 2024 will include:
- Continued strong population growth at a time when we are not producing enough supply of new dwellings. This extreme shortfall will exert upward pressure on house prices and rents throughout 2024.
- It is anticipated that interest rates will fall in the second half of 2024 and at some stage next year it is likely APRA will relax its mortgage serviceability buffer. This is currently at 3% and the combination of these factors will increase borrowing capacity.
- FOMO (fear of missing out) will creep in as buyers realise all the price falls of 2022 have now been made up and the media will keep mentioning new record prices being achieved.
HEADWINDS
- Stretched affordability will remain an issue in 2024, however, buyers will want to get on with their lives and therefore choose townhouses or apartments over homes or move to more affordable suburbs.
- The RBA wants to lift unemployment to help slow inflation. Financial uncertainty and worries about job security will stop some buyers from making important decisions like buying a home or an investment property.
- Poor consumer sentiment was a feature of 2023, holding back property buying decisions, and until there is more certainty about our economy and confidence that interest rates have peaked and inflation is under control, it’s likely that consumer confidence will remain low in the first half of 2024.
The strongest performers are likely to be Brisbane and Perth, where population growth is expected to outpace supply more than in other cities.
ANZ believes that real wage growth from early 2024 and modest interest rate easing from late 2024 will also support borrowing capacity and prices.
With the increase in value of houses strongly outpacing the apartment market recently, now with the differential in price between units and houses at the highest level on record, and with houses becoming more unaffordable for many, we should see strong capital growth ahead for family-friendly apartments in great neighbourhoods.
Here are ANZ Banks forecasts for for the next few years:-
8 economic and property trends to watch out for
1. The recovery phase of the market will continue in 2024
Property price growth will continue throughout 2024, albeit at a much lower rate and our housing markets will be fragmented as affordability will affect many homebuyers.
2. Interest rates will fall
Interest rates have most likely peaked, but are likely to remain higher for longer than many would like as inflation will remain stubbornly higher than the RBA hopes for a little longer.
When interest rates eventually fall, which could be in late 2024 or early 2025, this is likely to encourage greater housing investment and more homebuyers.
3. Our property market will be even more fragmented
Of course, there was really never one Sydney property market or one Melbourne property market.
There are markets within markets – there are houses, apartments, townhouses and villa units located in the outer suburbs, middle ring suburbs, inner suburbs and the CBD, and they’re all behaving differently.
But our markets will be much more fragmented moving forward as some demographics struggle with cost-of-living, rent and mortgage cost increases (at a time of low wage growth) more than others.
It will either stop them from getting into the property markets or severely restrict their borrowing capacity which will negatively impact the lower end of the property markets.
Meanwhile, many first-home buyers who borrowed to their full capacity will have difficulty keeping up with their mortgage payments at the time of rising interest rates or when their fixed-rate loans convert to variable rates.
In other words, there will be little impetus for capital growth at the lower end of the property market.
That’s why I would only invest in areas where the locals’ income is growing faster than the national average – such as gentrifying suburbs – as locals will have higher disposable incomes and be able to and are likely to be prepared to pay a premium to live in these locations.
Many of these locations are the inner and middle-ring suburbs of our capital cities which are gentrifying as these wealthier cohorts move in.
At the same time, I see well-located properties in our capital cities outperforming regional property markets.
In fact our capital cities outperformed regional housing markets over the last year or so.
In the past one of regional Australia’s allure was its affordability compared to capital cities.
However, the surge in prices over the COVID lockdowns narrowed the price gap and this diminishing affordability undermines one of the key advantages regional markets had over metropolitan counterparts.
The measure of years to save a 20% deposit for the median regional home on a median regional income has risen from 7.4 years in early 2020 to 9.7 years, as opposed to 10.0 years for capital cities.
4. Migration
Net overseas migration to Australia will remain strong in 2024, however, the Federal government will lower the rate of temporary migrants coming to Australia.
This will keep driving rental growth as migrants tend to rent.
Only 38% of migrants own a home after being in Australia for five years, yet 71% of migrants own their home after 10 years.
5. Rents will keep rising
There is no end in sight for our rental crisis and rent prices will continue skyrocketing into 2024.
In fact, increased rental demand at a time of very low vacancy rates will see rentals continue to rise throughout the next few years.
6. Strategic investors will keep entering the property market
And they’ll squeeze out first-home buyers.
As rents continue to rise and the share of first-home buyers continues dropping, strategic investors with a realistic long-term focus will return to the market.
7. Neighbourhood will be more important than ever
In our post Covid world, people will pay a premium for the ability to work, live and play within a 20-minute drive, bike ride or walk from home.
Many inner suburbs of Australia’s capital cities and parts of their middle suburbs already meet the 20-minute neighbourhood tests, but very few outer suburbs do because there is a lower developmental density, less diversity in its community, and less access to public transport.
And ‘neighbourhood’ is important for property investors too, and here’s why.
In short, it’s all to do with capital growth and we all know capital growth is critical for investment success, or just to create more stored wealth in the value of your home.
This is key because we know that 80% of a property’s performance is dependent on the location and its neighbourhood – in fact, some locations have even outperformed others by 50-100% over the past decade.
And it’s likely that moving forward, thanks to the current environment, people will place an even greater emphasis on neighbourhood and inner and middle-ring suburbs where more affluent occupants and tenants will be living.
These ‘liveable’ neighbourhoods with close amenities are where capital growth will outperform.
What sets these neighbourhoods apart is the demographics – these locations are generally gentrifying or are lifestyle locations and destination locations that aspirational and affluent people want to live in.
So lifestyle and destination suburbs where there is a wide range of amenities within a 20-minute walk or drive are likely to outperform in the future, fetching premium prices in 2024.
8. Our economy and employment will remain robust
Sure the RBA continues in its efforts to slow down our spending a little in order to bring down inflation.
But despite this our economy will keep growing (albeit a little slower) and the unemployment rate will remain low thanks to the many new jobs created as our economy grows.
Local Capital Cities Market Predictions for 2024
As we know, there is not one Australian housing market, but markets within those markets, and again within those.
To give a better view of market predictions for the next 12 months in your area, here’s a breakdown of each local capital city’s market predictions for 2024.
MELBOURNE : fell 0.43% in June, down 0.07% year-on-year.
This is the slowest pace of annual growth since July 2023, as prices remain 3.89% below their March 2022 peak.
Price momentum is weaker in Melbourne as buyers have consistently enjoyed more choice relative to other markets.
At the same time, construction rates relative to population growth in Victoria have been somewhat balanced compared to other parts of the country.
Finding that on-the-ground sentiment has changed and strategic investors and homebuyers are accepting that inflation has probably peaked and that interest rates are likely to peak in the next few months, so they are getting on with property decisions.
While more buyers are active in the market, there is currently a shortage of good quality stock on the market – while house prices have been resilient, Melbourne rental rates are experiencing weaker conditions due to a higher supply of rental properties, and less demand.
SYDNEY :has slowed over the past quarter in Sydney as home prices lifted 0.41% in June, the slowest pace of monthly growth since December 2023.
Still, prices rose to a new peak, up 3.57% year-to-date, 6.39% above June 2023 levels and 12.38% above their November 2022 low.
The increase in properties hitting the market this year has been met with strong demand, driving further price growth.
However, the pace of growth has eased steadily since the end of the summer selling season as buyers enjoy more options
Moving forward, the various sectors of the Sydney property markets will be fragmented, which is a more “normal” property market
Over the last few months, the sentiment of both Sydney property buyers and sellers has changed and buyers are pushing up the price of well-located A-grade homes and “family-friendly” apartments which are still in short supply, but B-grade properties are taking longer to sell and informed buyers are avoiding C-grade properties.
Sydney’s strong auction clearance trends are also a great “in time” indicator of market sentiment and a leading indicator of future property prices.
BRISBANE : remains one of the strongest performing markets over the past year.
Brisbane is now the second-most expensive capital following a period of consistently strong growth.
Brisbane has surpassed Canberra to remain the second-most expensive capital following a period of consistently strong growth.
Prices are now 19.96% above their December 2022 low, putting values ahead of Melbourne and Canberra.
Brisbane remains one of the strongest performing markets over the past year with home prices now 14.14% above June 2023 levels.
Prices lifted a further 0.50% in June, reaching a new peak, although the pace of growth is slowing compared to earlier in the year.
Our on-the-ground experience at Metropole Brisbane shows that there is emerging strong demand from both home buyers and property investors for A-grade homes and investment-grade properties.
PERTH : has maintained its streak of relative outperformance and remains the strongest market in the country for monthly (+0.65%) and annual (+22.52%) home price growth.
Tight supply amid strong buyer demand has seen competitive conditions fuelling strong price growth.
The relative affordability of the city’s homes, population growth and very tight rental markets are also supporting home values.
However today, buying in such a market means you are likely buying at – or after – the peak of the market.
I would be cautious about buying in many of the cheaper Perth suburbs where invetsors are buying at the current prices because they’ve run ahead of the broader market.
Once investor demand from the east coast slows down, these areas are going to weaken first.
The smart money would have been there 2-3 years ago – and is now focused on other states that are early in the growth cycle.
n : remains one of the country’s top-performing markets, as home prices rose 0.45% in June to a new peak, up 14.61% year-on-year.
The comparative affordability of the city’s homes has seen prices defy the significant increase in interest rates since May 2022.
Low stock levels are also intensifying competition, with home prices in Adelaide rising at a fast pace over the past year.
Despite the strong pace of annual growth, monthly growth eased in June to the slowest pace since March 2023.
CANBERRA : fell 0.05% in June, though prices remain 0.58% above June 2023 levels.
This leaves prices 5.30% below their March 2022 peak
HOBART : was the darling of speculative property investors and the best-performing property market in 2017- 2018
Prices in Hobart have remained in a downturn for the past 27 months, falling a further 0.21% in June to sit 2.06% below levels seen this time last year.
Hobart remains the weakest capital city market when comparing annual price growth (-2.06%), as well as the change from peak (-9.56%).
However, this comes following a period of outperformance during the pandemic as well as strong growth in the years preceding. Home prices in Hobart are still up 34.2% since March 2020.
Hobart was an under performer for most of 2023 and is likely to remain so in 2024.
Long-term forecasts for Australian property markets (2025-2030)
Over the next decade, demand for housing is expected to benefit from the triple boost of rising population, rising jobs, and rising income.
Collectively this wealth effect will add around $860 billion of income over the next decade, a significant portion of which is likely could be directed towards housing.
The average Australian tend to spend 13% to 20% of their income and either rent or mortgage servicing.
Of course, no matter how many times you forecast property prices, it will always be difficult to predict exactly where property markets and prices will be in three months’ time, let alone 6-7 years into the future.
After all, history shows us that some properties will outperform others by 50-100% in terms of capital growth, so strategic property investors who buy investment-grade properties could expect to see the value of their properties more than double within the next seven to 10 years.
So we always have to take forecasts for Australian property markets with a big pinch of salt.
But what I am confident we’ll see for our future property markets comes off the back of our strong projected population increase.
This means 3 million more people will need somewhere to live and this will underpin our property markets.
What we predict for Australia’s property market is that there will be many more high-rise towers of apartments, not just in the CBD but in our middle-ring suburbs.
In fact, we are already starting to see this, particularly in Melbourne and Sydney.
And we also expect there will be lots more medium-density housing – in particular townhouses will be a popular way to live with modern large accommodation on more compact blocks of land.
So what about property prices for 2025-2030?
Some economists predict over 30% growth in Australia’s house prices over the next 3 years. Possibilities of 50% by 2030 which is hard to believe but the world is coming to Australia in the millions over the next 5 years with a never ending flow of new arrivals & residents.
This isn’t surprising because it’s often said that over the long term, the average annual growth rate for well-located capital city properties is about 7% (and we know that prices have risen 6.8% per annum over the past 30 years), which would mean, in general, well-located properties should double in value every generation of 10 years.
That would put Australia’s median dwelling price at around $1.1 million in 2030.
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Are you wondering how you should invest in this interesting phase of the property cycle?
If you’re like many property investors, you’re probably wondering what’s the right thing to do at present.
Should you buy, should you sell, or should you just wait?
You can trust the team at MRES & Co to provide you with direction, guidance, and results.
Whether you’re a beginner or an experienced investor, at times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s exactly what you get from MRES & Co
We help our clients grow, protect and pass on their wealth through a range of services including:
- Strategic property advice – Allow MRES & Co build a Strategic Property Plan for you and your family. Planning is bringing the future into the present so you can do something about it now!
- Buyer’s agency – As Western Australia’s trusted buyers’ agents MRES & Co have been involved in over $150 Million worth of transactions for clients and can do the same for you. On the ground team bring you years of experience and perspective – that’s something money just can’t buy. Help you find your next home or an investment-grade property.
- Property Development – We enable you to become an “armchair developer” and get all the benefits of property development without getting your hands dirty. We take the hassles out of your investment by assisting you with all the expertise you need, from concept to completion, including construction.
- Property Advisory – All property services including strategic tailored property planning for potential acquisition, selling, marketing, transacting in a world class manner that is record breaking outcomes.
- Property Management – Stress-free property management services help you maximise your property returns. Find out why MRES & Co clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years, and our properties lease 10 days faster than the market average.
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