The first six months of this year has seen a continuation of robust market conditions in most major markets, with the exception of Melbourne, according to the latest PIPA National Market Update.

This report pulls together insights and analysis from market experts and PIPA members from the latest edition of the PIPA Adviser e-magazine’s national market update.

PIPA Chair Nicola McDougall said over the past year, double-digit dwelling price growth has been recorded in Perth, Brisbane and Adelaide, while signs have emerged of a resurgence in Sydney and New South Wales more generally.

“Melbourne continues to be the talk of the property town – but not in a good way,” Ms McDougall said.

The median dwelling value in Melbourne increased just 1.6% over the past year, according to CoreLogic, but recorded a reduction of 0.6% over the most recent quarter.

“The anti-market sentiment about Melbourne has resulted in the city not only becoming a buyers’ market but one where investors are either selling up or giving it a very wide berth,” she said.

“This is predominantly due to its plethora of anti-investor rental reforms as well its new land tax regime that is set to cost investors billions of dollars over the years ahead.

“However, while the negative market narrative is prevailing at present, it is highly unlikely that our most populous city does not continue to offer sound property investment potential. Indeed, now is the perfect time to invest in Melbourne if can look past the current market negativity.”

Ms McDougall said there is no question that rental markets around the nation continue to be severely undersupplied with vacancy rates hovering around one per cent for more than two years now.

“The myriad new rental reforms being proposed or enacted are doing nothing to encourage existing investors to stay the course nor to motivate potential new entrants into the property investment market,” she said.  

“One really has to wonder if State Governments understand how their unnecessarily restrictive policy decisions are worsening the rental crisis or, in fact, if they know what they are doing at all.” 

NEW SOUTH WALES  

Terry Ryder, Director, Hotspotting

“More than half of the most supercharged suburbs in the nation are located in New South Wales, according to the Hotspotting Price Predictor Index Winter Edition.

“The market resurgence in parts of Sydney and Regional New South Wales began last year, with solid activity being reported in a number of locations.

“In fact, we believe the top supercharged suburb in the nation is currently Surry Hills in Sydney City, which is indicative of several key trends in Australian real estate.

“Surry Hills is a market dominated by apartments, where demand has been rising in keeping with an emerging national phenomenon.

“Overall, the top end is undoubtedly leading the Sydney market while the cheaper areas are struggling to maintain their previously high sales levels.

“Locations where houses sell for multiple millions of dollars are the strongest clusters for buyer activity, in a Greater Sydney market where sales levels have moderated a little but continue to be solid.

“Looking across the sales data of the past several years, the Greater Sydney market overall suffered a notable slump in the 2022 calendar year, which bottomed in the December quarter of that year. The revival in 2023 peaked in the September quarter and has tapered off since then.

“Greater Sydney overall has no major constraints from listings levels, which have displayed normal patterns recently.

“Our analysis reveals three stand-out clusters of suburbs where sales activity is most vibrant, all of them at the upper end of the market – which are the municipalities of Woollahra, Waverley and Bayside.

“Within these LGAs, suburbs classified as rising markets include Bondi (median house price $3.8 million), Darling Point (median apartment price $2.68 million) and Paddington (median house price $3.16 million).

“At the opposite end of the market spectrum, outer-ring areas, including the municipalities of Blacktown, Hills Shire and Penrith, have lost momentum and have significant numbers of suburbs classified as declining markets.

“Outstanding individual markets are the outliers in a Regional New South Wales market, which overall is steady and consistent but not booming.

“Like much of Australia, Regional NSW has total sales levels that are higher than a year earlier, but below the activity achieved in the latter part of 2023 – and a long way short of the boom levels of 2021.

“The March 2024 quarter is down 12% compared to the December 2023 quarter while being 10% higher than the March 2023 quarter.

“There are many contrasting scenarios across Australia’s most populous state, with some strong rising markets, others with moderate growth situations, and some which are struggling to regain momentum.

“Across Regional NSW, these are the standout growth markets, based on individual Local Government Areas, according to our research: Shoalhaven, Eurobodalla, Wollongong, Port Stephens, the Mid-Coast, Greater Newcastle, Lake Macquarie, the Hunter Region, the Clarence Valley, and Albury at the Victorian border.”

VICTORIA

Antony Bucello, Director, National Property Buyers

“Whilst Melbourne’s price growth has been moderate in the last year, the market has demonstrated incredible resilience in a challenging real estate landscape and is now poised for an upswing.

“In the last 12 months ending June, Melbourne’s property values rose 1.84% and since the pandemic have risen 11.2%. The median dwelling value according to CoreLogic is currently $780,437.

“Whilst this growth is subdued compared to some of the other capital cities, the long-term fundamentals of Melbourne remain in place and the current market conditions make it a good time to buy for the opportunistic investor.

“However, there is no point denying that there are challenges in the marketplace that particularly affect investors. At a national level, interest rates and the cost-of-living crisis are impacting everyone, however, closer to home at a state level increased taxes and tightened rental regulations have made it more expensive to hold a property.

“However, with a vacancy rate of only 1.3% and weekly rents rising nearly 10% in the last 12 months, the rental market is tight, and properties are in high demand providing investment owners with increasing rental yields and cash flow.

“The Melbourne market has proven its resilience in 2024 with the REIV reporting auction clearance rates consistently in the mid-70s, which represents a fairly balanced market between buyers and sellers. And once inflation calms down and interest rates begin easing, Melbourne, as one of the largest real estate markets in the country, is poised to rebound significantly.

“Key drivers include strong population growth, low unemployment, and substantial infrastructure spending in the metropolitan area, dubbed the ‘Big Build’ with major works already under way for roads and the rail network.

“There continues to be a considerable amount of activity occurring in the marketplace with supply levels trending 13% above the historic five-year average, which is partly because Victoria has the highest completion rate for new builds since late 2018 compared to the other states, according to CoreLogic.

“And for a state that has a projected population growth of around five million more people by 2051 and has repeatedly performed strongly on the world stage as one of the most liveable cities in the world, there are plenty of excellent opportunities for those looking for a long-term investment strategy.”

QUEENSLAND       

Michael Pell, Managing Director, Propell Property

“Market conditions across Queensland remain extremely strong. We’re seeing prices continually increase – whether that’s established properties or land prices – because there is very robust buyer demand.

“First home buyer activity is particularly solid and is being aided by the $30,000 First Home Owner Grant for the purchase or construction of new dwellings in Queensland.

“Plus, the State Government recently announced an increase in the stamp duty concession for first-time buyers. The first home concession applies to a home valued under $800,000 from 9 June this year.

“Across the board, though, market conditions are vigorous whether it’s a multimillion-dollar home on the Ise of Capri on the Gold Coast or more affordable properties in Ipswich and Moreton Bay. 

“If you look at places like the Isle of Capri, there’s still a lot of people moving up from the southern states with bigger budgets, who are keen to secure their slice of Gold Coast real estate.

“However, investor activity is very strong from local and interstate investors, who recognise the opportunities to purchase across the State.

“That said, there is still a huge land shortage, and developers are putting their land prices up, and they’re only going to do that if the market is strong.

“So, there is urgency for people to secure properties because the prices are going up. An example is land in White Rock in Ipswich, where new house constructions were available for the mid $600,000 range but are set to be valued at the mid $800,000s on completion.

“While property prices have been rising in Queensland over the past year, they still remain much more affordable than Sydney and Regional New South Wales, which is why we are seeing so much more enquiry from interstate property buyers. 

“The Queensland rental market also remains severely undersupplied as well, with the latest vacancy rate research showing record low levels of availability.

“The Real Estate Institute of Queensland Residential Vacancy Report for the March 2024 Quarter found that of the 50 local government areas and sub regions covered in the report, vacancy rates fell in 22, were stable in 10 and climbed in 18, compared to the previous quarter.

“Only one area, Mount Isa (3.4%), had a vacancy rate within the range that the REIQ classifies as “healthy” (2.6% to 3.5%).

“More than half of the areas reported on were in extremely tight territory, hovering at 1% or below, and the overall State vacancy rate sits at an astonishingly tight 0.9%.”

SOUTH AUSTRALIA

Jess Elam, Buyer Advocate, Elam Property

“Adelaide has set a new median home price record, rising 14.61% over the past year, the quickest growth in Australia after Western Australia.

“As of June, the median home price reached $759,000, according to the latest PropTrack Home Price Index. Despite a 0.13% drop in regional South Australian home prices last month, they remain 11.79% higher than in June 2023.

“Adelaide’s market strength is driven by its comparative affordability and low stock levels, according to PropTrack.

“Since March 2020, home prices have increased by 70.5% in Adelaide and 68.7% in regional South Australia. PropTrack attributes Adelaide’s swift price growth to its affordability and limited stock, despite considerable interest rate hikes since May 2022.

“Limited stock in Adelaide supports robust selling conditions and quick price growth, although this growth is beginning to decelerate, similar to trends in other capital cities. Home equity gains have helped shield many Adelaide homeowners from interest rate increases.

“Over the past year, North Adelaide saw an 18.93% increase in median home prices to $658,000, while the Barossa-Yorke-Mid North region experienced a 15.69% rise to $427,000. Other top-performing areas in Adelaide include the West (up 13.85% to $829,000), the South (up 13.17% to $786,000), and the Central and Hills area (up 12.76% to $939,000).

“South Australia is continuing to experience increased interstate and overseas migration. This influx of new residents continues to add to the positive momentum in the housing market.”

TASMANIA

Sam Spilsbury, Director, Buyers Agents Tasmania

“Tasmania’s housing market experienced varied movements in the past year, reflecting dynamic shifts in median sale prices and transaction volumes across different property types.

“The moving annual median sale price for houses saw a slight decline of 0.4% year-over-year to $607,635 as at June 2024.

“Despite this, house sales surged by 14.6%, indicating robust activity in this segment of the market.

“In contrast, other dwellings in Tasmania saw a more significant decline in median sale price, dropping by 5.0% to $478,000. However, sales for other dwellings increased significantly by 73.6%, highlighting shifting preferences or investment patterns.

“The moving annual median sale price for land decreased by 6.7% to $253,938, while land sales increased by 32.2% to 115 sales. This suggests potential opportunities in the land market amidst price adjustments.

“The rental market in Tasmania showed varied trends in vacancy rates and rental prices across major regions. Tasmania’s overall vacancy rate increased marginally by 0.1% to 2.5% in June 2024.

“Notably, Hobart saw a 0.2% increase to 2.8%, while Launceston and the North-West Centre maintained steady rates of 2.3% and 2.2%, respectively.

“Rental prices for two-bedroom units in Hobart remained stable at $460 per week, while three-bedroom houses decreased by $25 to $525 per week.

“In Launceston, two-bedroom unit rentals decreased marginally by $5 to $395 per week, with three-bedroom houses remaining unchanged at $480 per week.

“Meanwhile, in the North-West, rentals for units decreased by $5 to $320 per week, and houses decreased by $20 to $400 per week.

“Tasmania’s housing market continues to evolve with nuanced changes in sale prices, transaction volumes, vacancy rates, and rental prices across its regions. These insights provide a comprehensive overview for investors, homeowners, and renters alike, navigating the current dynamics of Tasmania’s real estate landscape.

“This update underscores the resilience and adaptability of Tasmania’s property market amidst broader economic conditions, offering valuable perspectives for stakeholders in the industry.”

ACT

Claire Corby, Buyers’ Agent, Capital Buyers Agency

“In Canberra, property values have been on the rise with a gentle 0.7% quarterly rise to May, according to CoreLogic, mainly due to a shortage of quality homes coupled with consistent buyer demand.

“This has been disproportionately skewed to the top end, with scarcity of listings in blue-chip suburbs driving price growth for the up-sizer market.

“Canberra is down a substantial -14.9% for new listings in comparison to last year, according to CoreLogic. Auction activity remains strong, with good clearance rates hovering in the 50% to 60% range.

“Anecdotally, well presented homes with “nothing to do” are attracting a competitive crowd at auction, eager for a solution, whereas the selloff of subpar investor stock that is often in need of work fails to excite a buyer pool who are feeling the high cost of borrowing.

“The introduction of stamp duty concession for sub-$1 million homes began on 1 July, and it’s expected this will drive demand for entry-level homes and excite first home buyers who may be funded by the Bank of Mum and Dad to act sooner rather than later. With few listings over the brisk winter months, the spring market is a strongly anticipated one for the tail end of 2024.

“The rental scene in Canberra has also seen some activity, up ever so slightly to 2.1% annually to May. The ACT rental market has followed the national trend with prices creeping upward from high demand and limited supply.

“A lag in new rental properties coming onto the market has kept supply tight, and an influx of public servants in recent weeks has soaked up much pre-existing rental stock.

“Increased legislation has been a challenge for residential landlords in the ACT to navigate and shows no sign of abating. Upgrades to insulation are now mandated, there’s a blanket removal of “no fault” lease terminations, mandatory inclusion of break lease clauses, tenant pets cannot be refused without prior ACAT approval, and advertising compliance actively targeted by the ACT Government.

“New swimming pool and tree protection legislation has also been enacted in recent months, plus a new tax is on the way in 2025 for short-term leasing – an Airbnb Tax. While we know Canberra loves its red tape, it does make for a very compliance-heavy environment for ACT investors.

“Canberra’s real estate market is showing resilience with ongoing growth in property values and rental demand. However, the scarcity of quality listings and rising cost of ongoing compliance for property owners are challenges to be navigated carefully. Staying informed about these trends will be crucial for both buyers and investors.”

WESTERN AUSTRALIA

Dr. Kevin Hoang, Senior Economist, Head of Property Research, inSynergy Advisory

“Perth has emerged as one of the best-performing property markets in Australia, showing all the signs of a hot market.

“Prices have increased by 22% in the past 12 months and 60% over the past four years. Days on the market have reached a historic low of eight days, and the vacancy rate has dropped to 0.5%.

“Most notably, the market is moving so fast that almost all sales are advertised without a price guide, resulting in sale prices tens of thousands above the reserve. This is likely driven by a fear of missing out (FOMO) in a bid to capitalise on further price growth.

“The main drivers of the current surge are supply constraints, affordability, and a strong economy.

“In the last 12 months, new dwelling completions were 15,500, while the population increased by 94,000, resulting in severe under-supply conditions with six new arrivals per new dwelling built.

“If an average household size of 2.5 is used, then almost 20,000 dwellings are under-supplied in the city over the past 12 months. Under the current higher capital and labour costs, it would take years for supply to catch up with growing demand, fuelling further pressure on housing prices.

“Despite prices having increased by 60% over the past four years, the current house prices of $800,000 in Perth remain highly affordable compared to other east coast cities, such as $1.6 million in Sydney.

“From a long-term perspective, starting at $96,000 in 1990, Perth’s house price has increased by 815%, compared to 1009% in Sydney, 552% in Melbourne, 951% in Brisbane, 783% in Adelaide, 892% in Canberra, 921% in Hobart, and 700% in Darwin. Therefore, Perth’s accumulated price growth is broadly aligned with other capital cities.

“Rich in natural resources, with $230 billion in mineral and resource exports per year, a GDP per capita of $157,000 per year (against the national average of $90,000), and large infrastructure projects in the pipeline, including Metronet worth $12 billion and the AUKUS site expansion project worth $8 billion, Perth has all the fundamentals for a thriving economy in the years ahead.

“Where will we go from here? While prices are higher than a few years ago, the vacancy rate is low, the population is projected to increase, and most importantly, the prices remain affordable for a capital city. Therefore, the best-predicted trajectory is that Perth’s price growth will likely continue to rise in the next few years, with stronger growth rates in the low to middle price range and lower growth rates in the top end of the market.”

ENDS

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