The first half of 2024 highlighted a clear divergence in the performance of Australia’s capital city property markets, according to the Real Estate Buyers Agents Association of Australia (REBAA).
REBAA President Melinda Jennison said Perth, Adelaide, and Brisbane had consistently led the market in dwelling price growth since the pandemic, including maintaining their top positions over the past six months.
In contrast, other capital cities have experienced relatively flat market conditions during the first six months of this year, she said.
“Across the country, the more affordable end of the market continues to outperform the higher-priced properties in terms of price growth, aligning with the trend of stronger monthly growth in the unit market compared to the house market,” Ms Jennison said.
“Nationally, property values are still on the rise month-on-month, though the rate of growth is easing. This slowdown may be attributed to persistent inflation, delays in anticipated interest rate cuts and concerns that rates may stay higher for longer.
“Additionally, cost-of-living pressures continue to tighten household budgets.”
Ms Jennison said that despite these challenges, the new Stage 3 tax cuts are expected to boost disposable incomes and borrowing capacities for many households, potentially increasing housing demand and strengthening prices further.
“Meanwhile, national property listings remain some 17% below the previous five-year average, though, there has been a gradual increase in advertised supply since March, when it was 23% below average,” she said.
“There is, however, a large variation in local supply levels, which contributes to the differing price growth performances across the country.”
Ms Jennison said while there had been hope for an increase in housing supply due to the Federal Government’s National Housing Accord, per capita building completions and approvals are currently at historic low levels.
“The price discrepancy between existing and new properties presents a challenge for new developments, with construction costs in many areas exceeding the selling prices of existing homes,” she said.
“Despite strong demand for new housing, rising construction costs are making replacement costs higher than existing home prices in many regions. “
Mortgage arrears are on the rise, as indicated by the latest APRA data for the March quarter, yet they remain slightly lower than pre-COVID levels, she said.
“While some households are starting to face financial hardship due to increased mortgage costs and living expenses, overall mortgage arrears appear to be contained,” Ms Jennison said.
“Overall, the outlook for the Australian property market is expected to remain patchy, with regional variations in price growth performance based on localised supply and demand metrics.”
NEW SOUTH WALES
REBAA NSW State Representative Linda Johnson said the NSW real estate market is continuing to be shaped by economic shifts, regulatory changes, and evolving consumer behaviours.
She said key sectors – including residential, commercial and industrial – experienced distinct trends and challenges throughout the financial year.
“NSW’s residential property market saw a period of adjustment and moderation following several years of robust growth,” Ms Johnson said.
“Sydney, the primary driver of NSW’s property market, felt a stabilisation with median prices leveling off. Government interventions aimed at cooling the market, such as tightened lending criteria and increased taxes on foreign investors, contributed to a more sustainable pace of growth.
“Suburban and regional areas continued to attract buyers seeking lifestyle changes and remote work opportunities, bolstered by ongoing infrastructure improvements and community development projects.”
Ms Johnson said supply constraints have persisted, particularly in established suburbs, contributing to a competitive market environment.
“Due to exorbitant building costs and skilled labour shortages, new and renovated homes are gaining popularity over those requiring significant works,” she said.
“Continued economic uncertainty has maintained a state of paralysis in the market with buyers and sellers alike waiting to see what happens towards the end of the year as well as with interest rate fluctuations before moving forward.
“This has opened the door to more off-market opportunities, as more motivated sellers are erring on the side of caution before investing in marketing or taking the leap to sell before finding their next home.”
Mortgage downsizing buyers are performing conservatively by not utilising their full borrowing capacity and showing hesitancy to move forward with decisions, Ms Johnson said.
“On the flip side, new housing developments in growth corridors and outer suburbs supported an increase in supply, offering more options for homebuyers. Regional areas benefited from this trend as property affordability, cost of living, and lifestyle factors continued to attract buyers seeking younger and larger properties, as well as a quieter pace of life,” she said.
“The commercial property sector in NSW demonstrated resilience, particularly in key metropolitan areas like Sydney CBD and Parramatta. Demand for office space remained steady, although tenant preferences continued to shift towards flexible work environments and sustainability-focused buildings.
“Industrial real estate continued to thrive, driven by e-commerce growth and logistics demand in Western Sydney. Mixed-use developments gained traction, integrating residential, retail and commercial spaces to meet diverse market demands and urban renewal objectives.”
Ms Johnson said regulatory changes played a pivotal role in shaping the NSW real estate market over the past year.
“The state government’s focus on housing affordability initiatives included incentives for first-home buyers and policies aimed at increasing housing supply,” she said.
“Environmental sustainability measures also influenced development trends, with a growing emphasis on green building practices and energy-efficient designs across residential and commercial projects.
“Investor sentiment in the NSW property market remained cautious but optimistic towards the end of the financial year. Interest rates and borrowing conditions have tempered speculative activity.
“Looking forward, the NSW real estate market is poised for continued adaptation and growth amidst global economic uncertainties and domestic policy adjustments.
“Factors such as interest rate movements, housing affordability measures and infrastructure developments will persist in influencing market dynamics.”
VICTORIA
REBAA Victoria State Representative Luke Assigal said despite fluctuating economic conditions and interest rate hikes, the Melbourne property market remains a beacon for property investors and homebuyers.
“Melbourne’s property market has witnessed steady growth in recent months. According to recent data, the median house price in Melbourne has risen by approximately 3% year-on-year, reaching around $780,000. Units and apartments have also seen a moderate increase, with a median price hovering around $610,000,” Mr Assigal said.
“The Melbourne housing market has not performed as strongly as other states have since COVID-19, with the median house price at its lowest in the past 20 years when compared to Sydney house prices.”
Mr Assigal said some of the key drivers of the Victorian property market included population growth and infrastructure developments.
“Melbourne continues to attract a significant influx of new residents, both from interstate and overseas, with Victoria experiencing the biggest annual population increase out of the states. This population growth is a key driver of housing demand,” he said.
“Ongoing infrastructure projects, including the Metro Tunnel, West Gate Tunnel, and suburban rail loop, are enhancing connectivity and accessibility across Melbourne. These developments not only improve the quality of life for residents but also increase the attractiveness of suburban areas for property investment.”
While global economic uncertainties persist, Melbourne’s economy remains relatively stable, he said.
“The city’s diverse economic base, which includes strong sectors such as education, healthcare, and technology, provides a buffer against potential downturns. This stability supports continued confidence in the property market,” Mr Assigal said.
“Victoria’s rental vacancy rate increased for the fourth consecutive month in June 2024, reaching 1.47%, indicating a slight easing of market pressures. Despite some stabilization in Melbourne, the overall rental market in Victoria remains highly competitive and challenging.”
Mr Assigal said despite the positive outlook, there are challenges that potential buyers and investors should consider in the Victorian property market.
“The Reserve Bank’s recent interest rate hikes have impacted borrowing costs. Buyers need to carefully assess their financial capacity and potential mortgage repayments in this context,” he said.
“While demand remains high, the supply of new housing, particularly in sought-after areas, is struggling to keep pace. This imbalance can lead to increased competition and higher prices.
“Currently there is reduced competition from other investors caused by new tax policies and rental reforms affecting Victoria, causing a reduction in rental property supply. Although this needs to be taken into consideration when considering your options this could also present as an opportunity for investors.”
Mr Assigal said Melbourne’s real estate market may be showing subtler signs of growth, but it’s certainly moving in a positive direction.
“By homing in on the right locations and keeping an eye on quality, both investors and homebuyers can find promising opportunities. Now could be just the right moment to step into Melbourne’s property market and be part of its next growth phase.”
QUEENSLAND
REBAA President Melinda Jennison, who is based in Brisbane, said the city’s supply issue has been persistent for several years and is showing no signs of improvement.
“CoreLogic reports that in the four weeks ending June, the number of homes advertised for sale in Brisbane was 34% below the five-year average. Meanwhile, interstate migration rates in Queensland remain well above average, sustaining high demand,” she said.
“The strong growth in property values and rising rents have drawn investors back to the market, with new lending to investors in Queensland reaching record highs.
“Indeed, data from PropTrack shows that 27% of enquiries for Queensland properties come from interstate buyers with our own observations showing that man are seeking out the professional assistance of locally based buyers’ agents as well.”
However, property demand isn’t solely driven by interstate buyers, she said.
In June, the Queensland Government announced an increase in the stamp duty concession threshold for first home buyers, raising it from $500,000 to $700,000.,
“This higher price cap now extends eligibility to more homes, offering first-home buyers’ greater options. However, this change could also contribute to increase demand for properties that fall within the new criteria,” Ms Jennison said.
“These changes are expected to have the greatest impact in areas where median prices are near the caps.
“With the median unit price in Greater Brisbane below the new price cap, the effects may be more evident in the unit market.
“Likewise, in regional Queensland, where median house and unit prices are below the maximum price cap.
“Incentives like these are expected to boost demand, leading to increased competition for properties priced under the $700,000 threshold overall.”
In Brisbane, median house prices over the past six months have soared ahead of Melbourne with 6.5% growth, making Brisbane the third most expensive capital city house market in Australia, behind Sydney and Canberra, she said.
“Brisbane’s median house price has increased by tens of thousands of dollars since the start of this year and our unit market is now the second most expensive of any city around the nation, with 13.7% growth in the first six months of this year,” Ms Jennison said.
“This is the highest rate of six-monthly growth recorded across any capital city or regional market in Australia for houses or units, according to CoreLogic.”
Ms Jennison said the rental market in Brisbane has remained relatively unchanged for the past six months, with vacancy rates hovering around 1% all year.
“House rents are up 7.8% annually, and unit rents are up 8.5%. Weekly rental listings have remained relatively steady during this time,” she said.
“Overall, the Brisbane market remains robust with strong underlying fundamentals. Several drivers are likely to continue to maintain strong demand for Brisbane property in the foreseeable future, while the availability of listings remains well below long-term averages.”
SOUTH AUSTRALIA
REBAA SA State Representative Jess Ellam said the Adelaide property market had experienced remarkable growth over the past 12 months.
“The statistics back this up, with Domain’s latest house price report, for the June 2024 quarter, showing Adelaide’s market grew for the sixth consecutive quarter. Over the past year alone, median prices rose 16% for houses and 15% for units,” she said.
Ms Ellam said two key factors explain Adelaide’s excellent performance – strong population growth and investment potential.
“According to the South Australia Government, the state’s population is projected to reach between 2.33 million and 2.53 million by the end of 2031. At the highest end of the projection, this would mean an average annual increase of around 1.4%,” she said.
“This increase in population has, naturally, increased demand for housing, putting upward pressure on prices.
“I have noticed an increase in interest from investors, particularly in Adelaide’s southern coastal and inner-western suburbs. With rental rates growing and vacancy rates tight, investors can reply on strong rental returns.”
SQM Research’s latest data show that the Southern Adelaide region experienced a year-on-year increase in asking rents of 14.1% for houses and 6.8% for units.
Meanwhile, the rental vacancy rate for that part of the city has remained below 0.6% since June 2020. By comparison, the vacancy rate is 1.7% in Sydney and 1.1% in Brisbane.
“Additionally, despite Adelaide’s strong price growth over the past year, some locations remain affordable, leaving room for further growth,” Ms Ellam said.
“Several infrastructure projects are also under way, including the Torrens to Darlington (T2D) project, which will be the final link from the North to South corridor.
“There are pockets of Adelaide that offer very good opportunities for investors, whether your focus is capital growth or yield. In terms of the sales market, demand is high and stock levels are low, suggesting more price growth lies ahead. For the rental market, vacancy rates are at historically low levels, suggesting rents will also continue to grow.”
TASMANIA
REBAA Tasmania State Representative Sam Spilsbury said Tasmania’s real estate landscape saw diverse shifts over the past year.
“This reflected dynamic movements in median sale prices and transaction volumes across various property types,” Ms Spilsbury said.
“The annual median sale price for houses experienced a slight 0.4% decline year-over-year to $607,635 as of June 2024. Despite this, house sales surged by 14.6%, indicating robust activity in this segment.
“Conversely, other dwellings in Tasmania witnessed a more pronounced median sale price drop of 5.0% to $478,000. However, sales for these properties increased significantly by 73.6%, highlighting changing preferences or investment strategies.
“Meanwhile, the median sale price for land decreased by 6.7% to $253,938, with land sales increasing by 32.2% to 115 transactions. This suggests emerging opportunities in the land market amidst price adjustments.”
Ms Spilsbury said vacancy rates and rental prices showed varied trends across major regions. The overall vacancy rate for Tasmania increased slightly by 0.1% to 2.5% in June 2024.
“Hobart experienced a 0.2% rise to 2.8%, while Launceston and the North-West Centre maintained steady rates at 2.3% and 2.2%, respectively. Rental prices for two-bedroom units in Hobart remained steady at $460 per week, while three-bedroom houses decreased by $25 to $525 per week,” she said.
“In Launceston, two-bedroom unit rentals decreased marginally by $5 to $395 per week, with three-bedroom houses staying at $480 per week. In the North-West, unit rentals decreased by $5 to $320 per week, and house rentals dropped 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 navigating the current dynamics of Tasmania’s real estate.
“This update underscores the resilience and adaptability of Tasmania’s property market amidst broader economic conditions, offering valuable perspectives for stakeholders in the industry.”
WESTERN AUSTRALIA
REBAA President Melinda Jennison said Perth continues to lead all other capital city markets in monthly, quarterly, and annual growth.
“Perth has seen an uplift of 11.8% in house values and 13.7% in unit values in the first six months of 2024. However, there are early signs that demand may be waning as the growth rate has started to ease slightly,” she said.
“Some commentators suggest that east-coast investors have been driving up property values in Perth, making it increasingly difficult for local residents to afford homes in their own market.”
Ms Jennison said Perth remains a city with extremely tight supply, with total listings down 22.6% compared to last year and well below the five-year average.
“Meanwhile, sales volumes have increased by 7.7% year on year. Median days on market have also shortened, with a current median timeframe of just 10 days to sell a property, forcing buyers to act quickly to avoid missing out,” she said.
“The rental market in Perth is also tight, with vacancy rates remaining below 1%, although this has been tracking upwards over the first six months of the year.
“The volume of weekly rent listings in Perth has also started to trend higher in recent months. While the rents achieved are still showing strong annual growth in Perth, up 13.5% for houses and 13.7% for units, it appears that asking rents have been moderating recently.”
Gross rental yields in Perth remain attractive, currently at 4.2% for houses and 4.6% for units, Ms Jennison said.
“In other areas of regional Western Australia, house prices have increased 9.5% over the first 6 months of 2024 and units are up 5.3%. This indicates that the capital city region has been performing stronger than regional areas with the state,” she said.
ACT
ACT State Representative Claire Corby said the ACT real estate market has once again demonstrated its resilience to weather the ups and downs of changing market conditions.
“Traditionally a ‘steady as she goes’ location, the past 12 months have resulted in a quiet 2.2% increase in prices in Canberra dwellings overall. Units have recently woken from a long hibernation, while in the freestanding home sector it’s been the upper end of the market driving pricing growth,” Ms Corby said.
“Sales volumes have continued to dwindle, with overall supply one of the biggest challenges for buyers. The volume of sales is down -1.7% overall in the past year in the ACT.
“Scarcity of quality stock in a rising interest rate environment has led many would-be buyers to sit on the sidelines in recent months, preferring to bide their time until better options arise.”
Ms Corby said while overall prices remain quite steady, Canberra suburbs have begun to see a divide between locations.
“The outer suburbs have experienced some price discounting and an increase in urgent sales where once-new homes are now showing signs of aging and the debt-to-value ratios are generally higher, compared to the retention or slight growth in values of the more central suburbs,” she said.
“As talk of an economic downturn continues in the face of consistently higher costs of living, buyer preferences have reverted to the fundamentals of location and land size to underpin – and perhaps justify – purchase prices.”
Rental prices have trickled upwards, too, a small uptick of +2.5% in the rate of annual change, Ms Corby said.
“Houses have recovered from some significant rental discounting in 2023, where Canberra bucked the trend with its absence of a rental shortage in the private residential sector,” she said.
“Yields have fallen as a result, seeing many investors divest themselves of their investment property in the ACT.
“Rising compliance costs and the introduction of more red tape for landlords has also contributed to this trend. New regulations for minimum standards, the removal of no-cause evictions in 2023, plus rising rates and land tax have contributed to a less-than-friendly environment for investors.”
Ms Corby said the outlook for the ACT real estate market remains stable.
“Minimal price growth overall is anticipated in the coming months, balanced by more central locations outperforming those in the outer ring,” she said.
“Challenges such as the possibility of further interest rate rises, and limited housing supply will continue to influence buyer behaviour and vendor appetite for transacting alike. However, the market is expected to maintain its stability, supported by the region’s strong economic fundamentals and public service sector.”
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
