What’s happening in the Australian property market?
If you’re considering investing in the Australian property market, then it’s important that you’re aware of current housing trends. From the ongoing effect of the COVID-19 pandemic, increasing interest rates and the housing crisis, navigating the evolving landscape of real estate in 2024 is best done with the help of property market experts.
In this blog, the Capital Properties team take a look at the key housing trends that have emerged over the past few years and what they mean for property investors across different states and territories.
At Capital Properties, we’re committed to helping ADF members invest their disposable income wisely to achieve long-term financial freedom. That means staying up-to-date with housing trends and navigating the property market to take advantage of any opportunities that arise.
Our free Capital Properties Discovery Session is a great place to examine current housing trends and start your well-informed property investment journey.
On the go? Here’s 30 seconds of take outs:
- The Australian property market is still feeling the effects of the COVID-19 pandemic.
- There was a 16% increase in capital-to-regional movement since 2019.
- Property values in combined capital cities rose by 10.2% in over the last year.
- Almost each state & territory experienced record high property values in early 2022 & even though they’ve since fallen, property prices in most areas are still higher than pre-pandemic.
- High interest rates & rising living costs have put pressure on the property market.
- Rental vacancies are at their lowest since 2018.
- The national median rent is $600 per week.
- The government’s promise to deliver 2 million new properties by 2029 is falling short of its target & shows no sign of relieving the housing crisis.
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Post COVID housing trends – prioritising lifestyle
I know we all want to forget it ever happened, but the reality is that the aftermath of the COVID-19 pandemic has reshaped the Australian property market and we’re still feeling the effects.
In the early days of lockdowns Aussies sought out tree and sea-changes for a better work-life balance in unprecedented numbers. Access to remote work resulted in an increase in demand for larger homes with dedicated office spaces, outdoor areas, and proximity to essential amenities. We’ve talked about this in our blog “The big shift towards the ideal Australian Lifestyle”. Even now, the latest Regional Movers Index shows a 16% increase in capital-to-regional movement since 2019. But that trend doesn’t mean that cities are missing out, with an increase in value by 10.2% in property values over the last year in the combined capital cities.
Let’s take a closer look at what’s happening in each state and territory.
State and territory housing trends:
– New South Wales (NSW) & Victoria
The demand for city living stayed strong in Sydney and Melbourne, despite the challenges posed by high interest rates and the cost of living. NSW house prices grew to record highs in January 2022, climbing to 27% but have since fallen by 12%. Victoria hit its peak of 17.3% in February 2022 but has experienced a 9% fall. The current city market looks stable, but there’s an increased demand for more affordable housing options in outer suburbs and regional areas.
– Queensland
Sunny Queensland had a huge surge in demand for lifestyle properties, particularly in coastal regions like the Gold Coast and Sunshine Coast. Brisbane experienced an overall growth of 42.7% in property values by June 2022 and only a 10.9% fall.
And this housing trend looks set to continue as Queensland continues to attract both owner-occupiers and investors seeking the ultimate Aussie lifestyle.
– South Australia, Tasmania & Northern Territory (NT)
These regions have seen a mix of housing trends, with some areas experiencing significant growth due to the increased desire for space and relaxed lifestyle. However, some others struggled with affordability issues and limited supply. Adelaide had a growth of 44.7% in house values post pandemic and the market has remained strong with a fall of only 2.4%.
NT prices grew just over 31% during COVID with only a 2% fall, whereas Hobart saw a boom of 37.7% growth with a sharp fall of 12.9% in less than a year.
– Western Australia (WA)
Perth and other regional centres in WA experienced strong growth as remote work opportunities increased. The market peaked in July 2022 at 25.9% and has only dropped by 0.4%.
The state’s relative affordability compared to its eastern counterparts made it an attractive option for property investment. And a relatively high average salary in WA (approx. $1988 per week) means that the increased interest rates and cost of living seem to not have had the same detrimental effect as seen in other states.
High interest rates & the cost of living
The current high interest rates and rising cost of living have certainly put pressure on the property market, making affordability a concern for some potential investors. However, while these factors present challenges, they also create opportunities for many savvy investors.
With interest rates expected to stabilise in the coming months, it’s a great time for ADF members to explore property investment strategies that align with their long-term financial goals.
Rental prices
Although many homeowners are feeling the pinch and some prospective homebuyers might feel their dream of home ownership is getting further and further away, many renters are also having a tough time.
Right now, rental vacancies are at their lowest since 2018. Renters are battling in a highly competitive market, with the obvious outcome of increased rents.
Every Australian city has experienced an increase in the median price for rentals, for both units and houses. At the end of the March 2024 quarter, the national median rent advertised on realestate.com.au reached $600 per week. That’s an increase of 3.4% over the quarter and a 9.1% increase from the year prior. And with the current housing crisis, this shows no sign of letting up.
Navigating the housing crisis
With Australia’s population continuing to grow at a rapid pace, there’s no sign of relief for housing shortages and low rental stock. The national population increased by a record 659,795 people from September 2022 to the same month in 2023.
548,770 individuals migrated here from overseas, so as they’re unlikely to own their own property, they’ll be relying on rental accommodation – at least for the short term. Even the Federal Government’s Housing Accord goal to build 1.2 million new properties over five financial years from mid 2024 is looking like it’s too little, too late. In fact, Australia needs to approve about 80,000 more homes every year in order to meet the new dwellings target and we’re falling woefully behind. This chronic housing shortage is likely to keep driving up property prices and rents throughout 2024.
Again, this presents both challenges and opportunities for potential property investors. By leveraging expert advice and focusing on emerging growth areas, investors can navigate the housing crisis and continue to build a robust property portfolio.
What’s next for the Australian Property Market?
Economists and property experts will all have varying opinions on what the current housing trends means for the future of the Australian property market. From predictions of the market stabilising – along with interest rates, to the possibility of a surge in the market due to ongoing demand and supply, the team at Capital Properties will be keeping our fingers on the pulse of the housing market.
As always, the Capital Properties team are here to support ADF members to become informed investors by providing expert advice, personalised strategies, and access to premium investment opportunities across Australia.
The best place to start is our FREE Capital Properties Discovery Session which will help you identify what you need to start investing and give you an idea of what we bring to the table as property investment specialists. Then our follow up Strategy Sessions will help you create a plan to find your perfect investment and work towards achieving your goals.
You can also click the following links to access our monthly Australian Property Market Report and our free online Property Investment Tools and Apps.
