As we head into the final few weeks of 2024, there is no question that most property markets have weathered the high-interest-rate environment remarkedly well – which is not surprising if you understand the basics of supply and demand, 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 some areas, such as Perth, Adelaide and Brisbane, are finishing the year posting double-digit dwelling price growth with few signs of any significant change to this state of play next year.

“Dwelling prices in our most expensive capital city, Sydney, are currently at record highs, however, recent data showed the first monthly decline since January 2023, following a short but sharp -12.4% drop in values between February 2022 and January 2023,” Ms McDougall said.

“The negative impact of anti-investor rental reforms in Victoria and its much maligned new ‘temporary’ land tax that lasts for 10 years continues to drag down property prices in that State as well as kybosh investor demand.

“As long as these punitive policies and taxes remain, investor demand is likely to continue to be subdued over the short- to medium-term.”

Ms McDougall said investor sentiment nationally has reduced significantly over the past three years.

“According to the 2024 PIPA Annual Investor Sentiment Survey, about 46% of investors believe that now is a good time to invest in residential property, but this percentage is down from the 56% reported last year and down significantly from the 62% recorded in 2021, when interest rates were at record lows,” she said.  

“The latest inflation reading is heading in the right direction, but the Reserve Bank is yet to offer any glimmer of intent regarding when interest rates may be reduced.

“The only thing that is certain is that it is clear that interest rate cuts are on the horizon, which will be welcome news to all current and prospective homebuyers and investors.”

NSW

Veronica Morgan, Principal, Good Deeds Property Buyers

“Generally speaking, the NSW property market has been steady throughout 2024. As we move through spring into the Christmas period, we are seeing an increase of stock and a slowdown in buyer activity overall, which is typical for this time of year in most markets.

“Sydney dwelling prices rose by a tiny 0.5% over the three months to September 2024, and regional dwellings rose 0.4%, according to CoreLogic’s Hedonic Home Value Index. House prices dragged the aggregate figures down, with units rising by 0.9% in Sydney and 1.3% across regional NSW.

“Whilst this growth has been nothing to write home about, Sydney dwelling prices reached a new record in July, so we’re currently in record price territory. Regional prices remain 2.8% lower than their COVID highs.

“In the September quarter, CoreLogic reported that upper quartile home values in Sydney fell by 0.3% compared to the broader middle half and lower quartiles, each growing by 1.2%. Traditionally, the upper quartile of the housing market tends to spearhead cycles, both during upswings and downturns.

“Clearance rates are a particularly important metric in the inner Sydney market. They demonstrate not only buyer confidence, but also vendor willingness to meet the market.

“Auction listings volumes have been rising steadily since the beginning of August, and over that period Domain has recorded clearance rates between 63% and 67.8%, indicating a balanced market.

“Total auctions exceeded 1000 on the third weekend of September, which was only the third occurrence this year, before setting a new record of over 1100 auctions the following weekend. Clearance rates remaining strong in the face of increased listings shows how resilient the Sydney market is at this point of time.

“Two metrics that are more telling in regional markets are vendor discounting and days on market. According to CoreLogic, vendors in regional NSW discounted their asking price by a median of 4% in order to secure a sale over the September quarter. This was an improvement on the same period in 2023 when the median discount was 4.2%.

“Conversely, it’s taking longer to sell, with 52 average days on market in regional NSW over the September quarter compared to 49 days a year ago.

“In Sydney, new listings were up 3.7% over September, compared to the same time last year, according to CoreLogic. This contributed to an increase in total listings of 6.9%, showing that the buyer pool is not absorbing all of the new stock.

“Regional listings were also up by a similar percentage (3.5%), however a larger proportion have transacted, resulting in a lower impact on total stock levels (1%).

“Rental price growth appears to be slowing down across the board, according to Domain’s September 2024 Rental Report, which recorded the weakest September quarter for Sydney house rents since 2020. Unit rents were stable for the first time in nine months.

“Nevertheless, price growth may be slowing, but vacancy rates remain low, and rents remain at an all-time high in most locations.”

VIC

Jenny Jia, Director, JL Property

‘Victoria’s real estate market remained sluggish and was in a state of a buyer’s market in the September quarter. 

“Overall, Melbourne’s dwelling prices fell by 1.1% during the quarter, with a 1.4% drop over the past 12 months, placing Melbourne’s median dwelling price behind those of Adelaide and Perth, based on CoreLogic research.

“The decline in regional dwelling prices also ranked first in the country. Over the past 12 months, house and unit prices fell by 1.3% and 1.6% respectively. As a result, Melbourne’s house prices have increased by only 9.9% since March 2020, far slower than in other capital cities, and they are 5.1% below the peak price recorded in March 2022.

“In the September quarter, different price segments experienced different extents of decline. Median house prices in the high-end market faced serious downward pressure, while middle-ring suburbs experienced more moderate declines, the outer suburbs declined the least, if not increased.

“This is primarily due to a shrinking borrowing capacity from high interest rates, which has shifted demand to more affordable areas. However, the premium of new buildings in outer suburbs could also be a potential reason contributing to the price resistance.

“Comparing houses and units, house prices in Melbourne declined by 1.3% over the quarter, while the latter dropped by 0.5%, which also reflected that buyers were chasing affordability.

“From the supply end, the number of homes for sale in Victoria increased by 10.2% year-on-year, with Melbourne seeing a 16% rise, the third largest among capital cities, according to PropTrack. Meanwhile, from the demand-side, ABS loan data shows that new loan commitments for owner-occupiers in Victoria in August rose by 11% year-on-year, while investor loans increased by 12%, indicating strong market absorption capacity.

“It’s worth noting that over the past year, a clear trend has emerged; properties are changing hands from investors to home buyers, thus more investment properties in Victoria have been transformed to homes. This trend further solidifies the foundation for dwelling prices in the long run, as owner occupiers tend to hold onto properties for extended periods.

“Despite Melbourne’s weak performance in the short-term, its long-term potential remains widely recognised by investors. According to PIPA’s Annual Investor Sentiment Survey 2024, published in September, 26.2% of investors believe Melbourne is currently the best city in Australia for property investment. In comparison, Perth (25.1%) and Brisbane (17.8%) ranked second and third, respectively.

“Even though the market is declining statistically, A-grade properties remain scarce in the market, attracting strong competition and prices continuously appreciate.”

QLD

Terry Ryder, Director, Hotspotting  

“Queensland has proved to be one of the best market performers over recent years, with strong price growth recorded in most municipalities as well as across dwelling styles.

“Queensland now also leads the nation in overall real estate transactions, including purchases by both homebuyers and investors.

“Some of the area with the greatest prospects, according to Hotspotting research, include Brisbane’s inner precinct, which has seen a boost due to increased infrastructure spending and the upcoming 2032 Olympic and Paralympic Games. These suburbs, all a part of the larger Brisbane City LGA, saw a rise in transactions in the June quarter.

“Bowen Hills, in particular, has been recognised as Australia’s top Supercharged Suburb by the Hotspotting Spring 2024 Price Predictor Index, indicating potential for future price growth.

“The Inner Brisbane precinct, made up of suburbs within eight kilometres of the CBD, has a high number of apartments and townhouses being purchased, reflecting a trend seen in major cities across Australia.

“In areas like Newstead, Bowen Hills, Fortitude Valley, and the Brisbane CBD, units are in high demand and often preferred over houses.

“This precinct is desirable for its close proximity to the CBD and is benefitting from ongoing improvements to connectivity and amenities, such as the $6.3 billion Cross River Rail project.

“While houses in the precinct tend to be expensive, unit prices start at a much more affordable median of $485,000. With multiple residential projects planned or under way, there may be an increase in supply in the future.

“North of Brisbane, the Sunshine Coast property market has experienced significant price growth since 2020 due to a strong economy and extensive investments in infrastructure.

“The region has seen the creation of 20,000 jobs in the past five years, attracting new residents. With over $20 billion of infrastructure projects either completed, under construction, or planned, the market is projected to continue growing. The construction of the new Maroochydore CBD is a prime example of this development, featuring office, hotel, and residential properties.

“With a booming economy, averaging four per cent growth per year over the past 15 years, the Sunshine Coast continues to offer lucrative investment prospects. The region comprises the Sunshine Coast LGA and the Noosa LGA, with both experiencing a levelling off of transaction numbers due to limited supply.

“Gladstone, a bustling coastal city situated 530 kilometres’ north of Brisbane, has emerged as a thriving property market in 2024. This success is backed by the presence of major industrial hubs in the LGA, including two of the world’s largest alumina refineries and the fourth-largest coal exporting terminal.

“As the city experiences a surge in construction for billion-dollar infrastructure projects, it is expected to continue growing and developing as an industrial hub through its State Development Area.

“In addition, Gladstone is quickly becoming a leader in clean energy, with the highest concentration of hydrogen projects in Queensland. This has resulted in a rise in population, with an estimated 14,180 new residents.”

SA

Bryan Ong, Director, Rise High Investor

‘In the July to September 2024 quarter, Adelaide’s property market showcased notable resilience, continuing its upward trajectory in the face of broader national trends.

“The median house price in Adelaide has climbed to $790,789, reflecting a robust 4% increase year-on-year. This growth has enabled Adelaide to overtake Melbourne in median house prices, positioning it just behind Brisbane, Canberra and Sydney.

September marked a continuation of this upward trend, with prices increasing by 0.53%. This growth is largely attributed to robust demand coupled with a persistent shortage of housing supply according to PropTrack.

“In many suburbs, competition among buyers is intensifying, with many buyers submitting offers above the asking price to secure their desired properties. This heightened activity illustrates the strong demand for residential real estate in Adelaide, reflecting ongoing supply constraints and the challenges that come with them.

“The rental market is equally dynamic, with median rents now at $580 per week. The vacancy rate remains at below 1%, leading to a challenging situation for tenants facing increasing rental costs and limited options according to CoreLogic.

“Despite the recent changes that came into effect on 01/07/2024 which aimed at improving tenants’ rights — such as doubling the notice period to end a tenancy, requiring a valid reason to terminate or not renew a tenancy, limiting the number of routine inspections, and making it easier to rent with pets — the rental market remains tight.

“Many prospective renters are still offering above-market rates or paying multiple months’ rent in advance to secure a lease, reflecting the ongoing challenges in the competitive rental sector. This trend highlights the ongoing challenges within the rental sector and reflects broader supply-demand issues affecting the housing market as a whole.

“For investors, the strong rental demand is a positive indicator of potential returns. However, the rising property prices also create challenges, emphasizing the need to identify investment-grade properties that can offer sustainable cash flow and capital growth for prospective property investors. As competition increases, investors must remain vigilant and strategic in their property selections to ensure favourable outcomes in this evolving market.

“As we move toward the end of 2024, the outlook for Adelaide’s property market appears promising. Despite some cooling in other Australian markets, Adelaide continues to demonstrate resilience, with both price growth and rental demand remaining strong. First home buyers are navigating a competitive landscape, while investors are optimistic about the city’s long-term potential, particularly in light of its recent performance compared to major capitals.”

TAS

David Zerna, Director, Timar Buyers Agency

“The 2024 Tasmanian property market tells a story of mixed signals and future promise. While spring usually sparks a real estate revival, recent figures reveal a slight dip.

“Hobart’s median house price saw a 0.8% decrease in the September quarter, settling at $654,302, with a 1.1% decline state-wide. Interestingly, new listings have dropped — down 21% in Hobart and 5.5% across Tasmania — suggesting heightened competition among buyers that could bring renewed energy in the months ahead.

“The rental landscape also varies by region. While vacancy rates increased to 2.5% overall and 2.8% in Hobart, rents have risen steadily 5.3% for houses in Hobart and 3.7% across the rest of the state.

“Investor yields are outperforming many mainland markets, averaging 4.3%, and investors currently are buying circa 25% of Tasmania’s housing stock, showing sustained, albeit cautious, interest.

“Balancing the cooling market is a significant infrastructure project that will boost the economy and enhance the state’s appeal. The $1.3 billion Marinus Link and the $27 billion 10-Year Infrastructure Pipeline will drive jobs, attract businesses, and solidify Tasmania’s role as a renewable energy hub. These developments promise long-term stability to the property market, making Tasmania a top destination for investors and lifestyle enthusiasts.

“In short, while the property market might have hit the pause button for some time now, the state’s scenic beauty, paired with ambitious development projects, makes it hard not to feel excited about what lies ahead for Tasmania.”

ACT

Claire Corby, Buyers’ Agent, Capital Buyers Agency

“The ACT market is well and truly in the midst of a flatline period, a trend underscored by auction results, supply uptick, buyer FOBO, and economic pressures.

“Over the last quarter, auction clearance rates in the ACT have gradually declined, now hovering around 45% to 50%. It’s been an early spring as a flood of supply came to market, with many investors tapping out to realise the price growth of recent years.

“Adding to the cooling sentiment, CoreLogic data reveals a -0.9% decline in dwelling values in the ACT for the quarter ending in September. This marks a reversal of the modest gains seen earlier in the year, largely due to elevated interest rates and the rising cost of living, which continue to weigh on buyer’s minds and keep a lid on prices.

“Without any relief on interest rates, the outlook suggests that prices could see further modest declines.

“On the rental front, the regulatory landscape for investors is tightening. A new mandate, requiring a Section 119 Certificate before leasing a property, will come into effect in 2025. This additional step introduces further red tape and adds to the existing costs for investors to absorb, such as minimum insulation requirements and banning of no-cause evictions, already in place in Canberra.

“The ACT election held in late October saw a tight race which came down to the wire in preferences, albeit with reduced Greens representation in the Assembly. Labor, should they form a minority government with the Greens, are expected to maintain Canberra’s overly regulated and tenant-friendly environment. Should this partnership prevail, it’s expected that investor regulations will remain stringent.

“Overall, the ACT property market faces a cautious period ahead with flattening prices, increased stock held over the holiday season, and a more regulated rental sector.

“Buyers currently have the upper hand in a market with choice aplenty – albeit the A-Grade properties always in hot demand from owner-occupier families – while investors who continue to ride out the storm must navigate an increasingly regulated and costly environment.”

WA

Glenn Biggins, Mortgage Broker, Focus Property Wealth

“Perth’s property market continues its impressive run, outperforming the rest of Australia in September, according to CoreLogic, with a median house price up 24.1% for the year to $797,184 – surpassing Melbourne’s $777,390.

“This places Perth as the fourth most expensive capital city, behind Sydney, Canberra, and Adelaide, however whilst the market remains robust, some initial signs of a softening trend are emerging.

“Despite this impressive performance, quarterly growth eased to 4.7%, down from 6.2% the previous quarter, with monthly growth at 1.6%. This deceleration is partly attributed to a slight increase in spring stock levels and a reported decrease in investment enquiries from eastern states’ buyers. 

“Real estate agents have reported enquiries from eastern states buyers seeking investment properties have diminished, suggesting a shift in demand dynamics previously due to Perth’s affordability over other capital cities.

“This suggests a potential market slowdown is under way, although the overall strength remains undeniable.

“The most resilient sector of the Perth market is the lower price bracket.  Affordability remains a crucial factor, driving demand and growth in the low-to-middle price ranges. 

“It should be noted that the Home Guarantee Scheme has a maximum purchase price limit of $600,000 in Perth. This is now almost $200,000 below the median price, providing a challenge for would be first home buyers in a competitive market. 

“Recent data from the Real Estate Institute of Western Australia (REIWA) reveals a slight increase in stock levels, which has subsequently impacted days to sell, albeit still at very low levels. 

“Current rental properties available are 1915, a slight increase from the 1719 properties available 12 months ago, indicating a trend to return to a more balanced rental market.   This is also reflected in the median rental asking price remaining at $650 per week.

“In the current environment, competition remains strong. Homebuyers are attending open houses in significant numbers, and many properties are being sold quickly, often with multiple offers. Additionally, there is a trend of owners reselling their homes within two years, taking advantage of the recent market growth.

“The question on everyone’s mind is: where to from here? With Perth’s median now exceeding Melbourne’s, the potential for further growth still exists, but the rate of increase will likely continue to moderate.

“Predicting the market peak is challenging, but the current data suggests a period of slower, more subdued growth rather than a dramatic downturn.

“The near-term outlook remains positive, with factors such as net migration and future RBA rate changes being key factors that will affect demand and affordability of the Perth market into 2025.”

ENDS

Bricks & Mortar Media | media@bricksandmortarmedia.com.au