Charlotte Jackson
July 25, 2024

The current Australian property market: trends, challenges, and opportunities

The Australian property market has long been a focal point of interest for investors, homeowners, and policy makers alike. Known for its resilience and periodic booms, the market offers a dynamic landscape that reflects broader economic trends, societal shifts, and policy changes. In this blog, we’ll delve into the current state of the Australian property market, explore the challenges it faces, and identify opportunities for investors and buyers.

Current Trends in the Australian Property Market

1. Steady Price Growth

Despite global economic uncertainties, the Australian property market has exhibited steady price growth. A perfect example of this is from our most recent Property Market Update, where Redbank Plains topped the list for Queensland House Sales in Q2. Taking a deep dive into this suburb and property type, we’ve observed a notable shift in house prices over time. At the same time last year, and even in the first quarter of this year, a significant portion of the housing market fell within the $500k and below range. However, as of the second quarter, houses priced under $500k have become scarce, representing just 2% of the market. In contrast, there has been a marked increase in properties within the $500k to $1M price bracket, with a quarter-on-quarter increase of 6%. Currently, 95% of house sales in Redbank Plains fall within the $500k to $1M price range.

2. Urban vs. Regional Dynamics

One significant trend is the shift from urban centres to regional areas. The COVID-19 pandemic accelerated this movement as remote work became more viable, allowing people to seek more affordable housing options outside major cities. Victoria has seen Armstrong Creek, located in Geelong, appear within their Top10 suburbs list for sales, and for Queensland Townsville’s popularity has continue to grow with Kirwan #3 and Kelso #9 both appearing in the Top10 for Houses last quarter.

3. Rental Market Pressures

The rental market is experiencing heightened pressure, with vacancy rates at historic lows in many parts of the country. This has resulted in significant rental price increases, particularly in inner-city areas. The influx of international students and return of overseas workers post-pandemic have further strained rental supply, creating challenges for tenants and opportunities for investors.

Challenges Facing the Market

Affordability Concerns

Housing affordability remains a critical issue, especially for first-time buyers. The gap between wage growth and property prices has widened, making it increasingly difficult for young Australians to enter the property market. Government initiatives like the First Home Loan Deposit Scheme aim to address this, but the challenge persists.

Interest Rate Fluctuations

Interest rates play a pivotal role in the property market. While recent years have seen historically low rates, the Reserve Bank of Australia has signalled further rate hikes to curb inflation. Rising interest rates could dampen borrowing capacity and reduce demand, potentially stabilising or even lowering property prices in the future.

Opportunities for Investors and Buyers

1. Diversification into Regional Markets

With the ongoing shift towards regional living, investors have an opportunity to diversify their portfolios by exploring properties in high-growth regional areas. These markets often offer better affordability and potential for capital appreciation compared to metropolitan centres.

2. Focus on Sustainable and Smart Housing

As sustainability becomes a priority, properties with eco-friendly features and smart home technologies are increasingly attractive to buyers. Investing in energy-efficient homes or retrofitting existing properties with green technologies can enhance property value and appeal to a growing segment of environmentally conscious buyers.

3. Leveraging Government Incentives

First-time buyers and investors should stay informed about government incentives and grants designed to support property purchases. Programs like the First Home Super Saver Scheme and various state-based grants can provide financial assistance and make property ownership more attainable.

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