21 Jan 2025

Affordability boosts market performance throughout 2024

Throughout this year, housing affordability was the most favoured attribute for property buyers, given the constraints on borrowing capacities, according to the Real Estate Buyers Agents Association of Australia 2024 Market Update (REBAA).

REBAA President Melinda Jennison said affordability underpinned market performance across capital cities in 2024 as the high-interest-rate environment continued to drag down borrowing capacity.

“Widespread affordability challenges, rising construction costs, as well as a higher proportion of investors and first home buyers have also driven stronger demand in these lower-value market tiers,” Ms Jennison said.

“While affordability challenges persisted throughout the year, with debt servicing ratios reaching record highs, continued population growth and a constrained supply of new housing have underpinned property prices.”

Ms Jennison said the Australian property market overall delivered a mixed performance across capital cities and regional areas, which was influenced by diverse local market dynamics and broader economic conditions.


“Among the capital cities, Sydney experienced relatively subdued growth, with Melbourne recording a slight annual decline in dwelling values,” she said.

“Affordability constraints and rising advertised stock levels were key factors contributing to softer conditions there, particularly in the upper quartile of these markets, with Melbourne also impacted by government policy changes impacting on property market sentiment.”

Conversely, Brisbane, Adelaide, and Perth stood out as the top-performing capitals, achieving strong annual growth rates, she said.


“These cities benefitted from a combination of affordability, strong demand, and low inventory levels,” Ms Jennison said.
 

“Hobart’s market remained largely flat, while Darwin stabilised after earlier declines, and Canberra posted modest growth.”

In Sydney and Melbourne, total property listings are now well above five-year averages, Ms Jennison said, giving buyers more choice and reducing urgency in their decision-making.

“However, in Brisbane, Adelaide, and Perth, advertised stock levels remain more than 20 per cent below the five-year average for this time of year,” she said.

“These markets continue to favour sellers, though conditions are beginning to show signs of gradual rebalancing.”

Ms Jennison said a potential interest cut rate next year could reinvigorate buyer demand and boost sentiment.

“While price growth may moderate, the ongoing imbalance between demand and supply is likely to sustain opportunities across both capital city and regional markets,” she said.

“Buyers and investors should closely monitor local trends to identify emerging opportunities amid varying market performances.”

NEW SOUTH WALES

REBAA NSW State Representative Linda Johnson said NSW real estate market has been characterised by distinct trends in both metropolitan and regional areas in 2024, influenced by factors like interest rates, economic conditions and shifting buyer priorities.


“Sydney, the heart of NSW’s real estate market, remains a key player in the metro scene,” Ms Johnson said.

“After a period of significant price corrections in late 2022 and early 2023, prices have stabilised, however they are still below peak levels and still showing signs of cooling, compared with other state capitals.”

Market metrics such as days on market, vendor discounting, auction clearance rates, and new listings have softened year on year, she said.

“High-interest rates continue to influence buyer behaviour, making affordability a concern for many, particularly impacting first home buyers,” Ms Johnson said. 

“Demand is now more concentrated in mid-range properties in outer suburbs where prices are comparatively more accessible.

“In some western suburbs of Sydney, there is an influx of new listings as thousands are selling relatively new project homes, on small blocks and similar price ranges – this is arguably a concentration of the mortgage cliff that was predicted.
 

“Conversely, the Eastern Suburbs and Lower North Shore, see continued demand from investors and high-net-worth individuals seeking long-term capital gains and premium assets, however, the market is slower than in the past.”

She said vacancy rates in Sydney are starting to increase moderately with more people opting to live together in family units or share houses as well as a lift in investor lending and commitments.
 

“In contrast, the regional property market in NSW is thriving, fuelled by lifestyle migration trends that began during the pandemic and have continued into 2024,” Ms Johnson said.

“People are still relocating to regional hubs like the Hunter Valley, Central Coast and Northern Rivers, seeking more affordable living options, larger properties and proximity to nature.


“Many buyers are moving for a better work-life balance, with remote work flexibility still a key driver.”

Overall, she said, the NSW market in 2024 was a mixed bag – while Sydney’s metro market adjusted to higher borrowing costs, regional areas continued to benefit from a post-pandemic surge, with demand showing no immediate signs of abating. 

“There is still a cohort of home buyers and investors taking a wait-and-see approach as economic uncertainties persist,” Ms Johnson said.

“They are running the gauntlet however – if we see even just one drop in interest rates, whenever that may be, the demand is there and confidence will increase with the potential to spur on another market increase.”

VICTORIA

REBAA Victoria State Representative Matt Scafidi said Victoria’s property market experienced notable fluctuations, influenced by various economic and policy factors in 2024.

“The introduction of increased land taxes by the Victoria Government significantly impacted property owners, particularly investors,” Mr Scafidi said.

“The land tax threshold was reduced, leading to higher tax liabilities for many, which, combined with elevated interest rates, prompted a surge in property listings as owners sought to divest.

“This trend was evident in the 28.4 per cent increase in distressed property listings over the past year, the highest in Australia, contrasting with a national decrease.”

However, he said, Melbourne’s property market faced additional challenges with the city recording the highest number of homes for sale since 2012 as supply flooded the market.

“New property listings in September and October reaching unprecedented levels – a 16 per cent increase compared to the previous year,” Mr Scafidi said.

“This influx provided buyers with more options and reduced the urgency to purchase. However, the market’s softness was evident, with property prices in most regional centres in Victoria either falling or stabilising.”

Despite these challenges, there were signs of resilience, he said.

“Investor activity saw an uptick, with new investor loans surging by 18.8 per cent nationwide. However, Victoria’s investor growth was modest at 5.1 per cent year-on-year, indicating a cautious approach among investors in the state,” he said.

“Looking ahead to 2025, forecasts suggest a mixed outlook for Victoria’s property market.

“ANZ predicts a 1.7 per cent decline in Melbourne’s house prices in 2024, followed by a 5.5 per cent rise in 2025.

“This anticipated recovery is attributed to factors such as limited housing supply, high immigration rates, and an expected reduction in interest rates towards the end of 2024.”

Mr Scafidi said market challenges are set to persist, including new dwelling completions hitting a decade low.

“Approved dwellings are also about 15 per cent below the 10-year average. This decline in supply, coupled with strong population growth, could exert upward pressure on property prices,” he said.

“Victoria’s property market in 2024 was marked by increased listings, policy-induced pressures, and cautious investor sentiment.

“While forecasts for 2025 indicate potential recovery, the market’s trajectory will depend on balancing supply constraints, policy decisions, and economic conditions.”

QUEENSLAND

REBAA Queensland State Representative Joanna Boyd said the Sunshine State property market had proven its resilience in 2024, weathering economic uncertainty, fluctuating interest rates, and evolving policies to maintain strong performance.

“Interstate migration, affordability, and robust demand across houses and units have been key drivers of growth, even as supply shortages created challenges,” Ms Boyd said.

“Brisbane’s property market remained particularly robust, with rising dwelling values and continued buyer demand. Despite affordability challenges, the city is expected to maintain momentum in 2025, driven by supply constraints and heightened buyer readiness.”

Ms Boyd said the rental market continued to shine, characterised by record-low vacancy rates and solid yields, attracting sustained interest from investors.

“However, the mismatch between vendor price expectations and buyer affordability added complexity to an already competitive landscape,” she said.


“Looking ahead,infrastructure developments like the Cross River Rail and Brisbane Metro are set to enhance Brisbane’s appeal, while the 2025 rollout of Queensland’s sellers’ disclosure regime will bring increased transparency to property transactions.”

Ms Boyd said despite ongoing challenges, including affordability pressures and supply constraints, Queensland’s affordability and strong rental returns continue to attract interstate migrants and investors.

“Sustained collaboration between government, industry, and communities will be critical to maintaining growth and stability,” she said.

“As Queensland looks ahead to 2025, its property market remains well-positioned to thrive, leveraging resilience, adaptability, and a proactive approach to navigate challenges and seize opportunities.”

SOUTH AUSTRALIA

REBAA SA State Representative Jess Ellam said Adelaide’s property market had started the year strong.  

“Adelaide’s housing market demonstrated resilience in the first half of 2024,” Ms Elam said.

“Quality properties sold quickly, often within two to three weeks, and consistently achieved prices above asking. Auction clearance rates were also strong at above 85 per cent, supported by a healthy number of registered bidders.”

Ms Elam said newly built homes also performed exceptionally well, achieving premium prices.

“This demand was largely driven by government incentives, including a stamp duty subsidy and the first home buyers’ grant, which have encouraged increased activity in this segment,” she said.

“Properties in the $500,000 to $1 million range continued to attract strong competition, drawing interest from both interstate and local investors, as well as homebuyers.”


However, as the spring buying season commenced, the market experienced a noticeable shift, she said.

“Stock levels were lower than anticipated, and by October, a reduction in active buyers created more opportunities and less competition for home buyers and investors,” Ms Elam said.

“This change has led to more properties being passed in at auctions and selling agents needing to negotiate harder to secure sales.

“On the ground insights suggest this shift is due to a mismatch between vendor expectations and the current market dynamics, compounded by uncertainty surrounding potential interest rate cuts.”

Ms Elam said, looking ahead to 2025, this softer market presents a great opportunity for home buyers and investors within all price points.

“With reduced buyer activity, now is an ideal time to secure properties at competitive prices,” she said.

“Once interest rates stabilise and economic confidence improves, buyer demand is expected to increase again, driving property prices upward.

“Investing in Adelaide now positions investors to benefit from future capital growth.”


TASMANIA

REBAA Tasmania State Representative Sam Spilsbury said Tasmania’s property market in 2024 had remained relatively stable following a period of adjustment after significant interest rate hikes and affordability concerns.

“While many buyers and investors have adopted a more cautious approach, the state’s inherent appeal continues to drive demand, underpinned by its unique lifestyle offerings, natural beauty, and ongoing infrastructure development,” Ms Spilsbury said.

“In 2024, Tasmania’s median property price was $681,400, a slight decrease from $695,000 in 2023. However, despite this drop in prices, the number of sales has increased by 19 per cent over the past 12 months, signalling a robust demand for property across the state.”


Ms Spilsbury said rental demand has also surged this year, contributing to a decline in vacancy rates statewide.

“Tasmania’s vacancy rate fell from 2.4 per cent to 2.1 per cent over the year, with notable increases in rental prices across key areas,” she said.


However, political uncertainty surrounding the rental market has led to a slowdown in the development of new rental properties, resulting in one of the lowest levels of new construction in the past decade, Ms Spilsbury said.

Looking ahead to 2025, Tasmania’s property market is expected to remain resilient, she said.  

“The state’s population growth is projected to continue, driven by ongoing interstate migration and Tasmania’s growing reputation as a desirable place to live,” Ms Spilsbury said.

“This trend is expected to support increased demand for regional and rural properties, particularly along the north and east coasts, as more buyers seek lifestyle changes and affordable alternatives to Hobart, Launceston, and Devonport.


“Infrastructure developments, including upgrades to transport, healthcare, and education facilities, will further bolster the appeal of regional areas.”

Sustainable urban development initiatives are also set to drive growth in key regional centres, positioning Tasmania as a strong contender for long-term investment, she said.

WESTERN AUSTRALIA

REBAA WA State Representative Matthew Hughes said Perth continues to outperform other Australian capital cities in property market growth across monthly, quarterly, and annual metrics.

“Perth’s residential market has experienced impressive gains in the past two years, although we’re beginning to see the growth curve flatten slightly, signalling that demand, while still robust, may be edging slowly towards a new equilibrium,” Mr Hughes said.

“This surge in value has been driven significantly by east-coast investors in the lower pricing sector, making it challenging for local buyers to compete.”

He said that despite a seasonal bump in listings, typical of the spring selling season, Perth’s property market is still contending with tight stock levels with available listings still sitting well below the five-year average.

“Meanwhile, sales volumes have trended up in line with the recent increase in listings, and the median days on market are still very low, at just 11 days,” he said.

“This means buyers are feeling the pressure to move quickly, or they risk bring priced out of the market.”


The rental market in Perth remains tight, with vacancy rates holding under one per cent, according to PropTrack, despite a slight upward trend since early 2024.

“We’re seeing more rental listings coming onto the market now, which may offer some relief in time; however, rents are still up substantially – 13.8 per cent for houses and 14.2 per cent for units year-on-year,” Mr Hughes said.

“However, we’re observing a moderating trend in asking rents, with rental price growth stagnating over the past nine months after a strong period of growth, off a very low base.”


In terms of yields, Mr Hughes said that Perth’s gross rental returns are still very appealing to investors, standing at 4.3 per cent for houses and 4.7 per cent for units.


“While ‘FOMO’ levels of demand have dissipated in recent months, our expectation is that upward pressure on prices will remain into 2025, and possibly beyond,” he said.

“Impending rate cuts are expected to increase activity in the middle and upper end of the Perth market, as borrowing capacity is unlocked for homeowners sitting on large amounts of equity, as a result of this long-awaited growth-cycle.”

ACT

ACT State Representative Claire Corby said the ACT property market demonstrated its hallmark ‘steady as she goes’ resilience amidst the shifts of 2024.

“The year saw an acute shortage of listings for the first several months, challenging buyers in a higher interest rate environment,” Ms Corby said.

“The arrival of spring, however, brought welcome relief with fresh listings, thus broadening options and choice for buyers.

“This surge in listings paved the way for a modest rise in buyer activity in November, signalling renewed confidence as market conditions stabilised.”

Despite these shifts, prices held steady, with CoreLogic reporting a modest -1.9% year-to-date fall in Canberra’s median value, she said.

“While hardly exciting, the absence of any heart-stopping declines in value is typical of the ACT market,” Ms Corby said.

“Central suburbs retained or grew slightly in value while outer suburbs carried the bulk of price discounting, particularly for aging properties.

“The ACT Election resulted in another term for a Labor Chief Minister, and with it, the promise of expanding Canberra’s light rail line.”

Ms Corby said the rental market mirrored this stability, with annual growth of 1.8 per cent bringing Canberra’s median weekly rent to $674.

“Challenges for investors persisted, with rising compliance costs and the introduction of further regulations dampening enthusiasm from landlords,” she said.

“Despite this, the market maintained its equilibrium, supported by the ACT’s strong public sector employment and economic fundamentals.”

Looking ahead, the ACT market is expected to remain steady into 2025, Ms Corby said.

“Supply constraints and affordability pressures will likely continue to influence buyer behaviour with no change expected until the May election, which may trigger a cleverly-timed interest rate cut,” she said.

“The fundamentals of location and land are safe havens, with central suburbs poised to outperform outer areas.”

ENDS

For more information or to organise interviews with Ms Jennison or other REBAA State Reps please contact:

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