The Australian property market is exhibiting notable trends as of November 30, 2024:
Property Prices and Market Resilience
- National Trends: Despite elevated interest rates and inflation, national house prices increased by 7.7% and unit prices by 6.1% between March 2023 and March 2024.
- Regional Variations: Perth, Adelaide, and Brisbane are leading in annual capital growth, with Perth’s home prices projected to rise by 25% by year’s end, and Adelaide and Brisbane by approximately 15%. Conversely, Sydney and Melbourne may experience declines of up to 5% in 2025 due to affordability challenges and potential delays in interest rate cuts.
Government Policies and Housing Supply
- ‘Help to Buy’ Scheme: The Albanese Government’s ‘Help to Buy’ legislation aims to assist homebuyers by contributing up to 30% of the cost for existing homes and 40% for new homes, requiring buyers to provide a minimum of 2%. This initiative seeks to alleviate financial burdens for first-time buyers.
- Victoria’s Housing Initiatives: Victoria has fallen behind other states in home building due to land constraints and increased costs. The state plans to boost housing supply with 27 new development precincts, aiming for 180,000 homes over a decade, though experts question the sufficiency of this measure.
Rental Market Dynamics
- Rising Rents: The rental market is experiencing significant strain, with room rents in sharehouses increasing by up to 90% in some areas, surpassing median weekly rents for entire homes in certain suburbs. This surge is attributed to limited supply and high demand, leading to affordability challenges for tenants.
Investor Activity
- Foreign Investment: International interest in Australian real estate is growing, with searches from countries like India increasing by 23%. Foreign investment in new housing has risen for the fourth consecutive quarter, reaching 10.1%, driven by buyers targeting properties in New South Wales and Victoria.
- Private Equity Movements: The home builder AV Jennings is the target of a $377 million acquisition bid by global private equity firm Proprium Capital Partners, reflecting increased activity in the property development sector.
Demographic Influences
- Baby Boomers’ Impact: Baby Boomers, holding substantial private wealth, are influencing the market through downsizing and relocation decisions, often moving to regional areas and seeking smaller, low-maintenance homes, thereby stimulating property markets in these locales.
Economic Indicators
- Interest Rates and Lending Policies: The Australian Prudential Regulation Authority (APRA) has maintained the current interest rate buffer for home loans amid rising loan stress and economic uncertainty, assessing borrowers at 3 percentage points above the product rate. This decision aims to ensure financial stability despite calls to ease borrowing limits.
In summary, the Australian property market is characterized by regional disparities in price growth, government initiatives to improve affordability, a tightening rental market, active investor participation, demographic shifts, and cautious regulatory policies. These factors collectively shape the current landscape of the market.
How to source an investment property?
When sourcing an investment property, there are many opportunities that offer some excellent investment returns. There are many factors and fundamentals that should be considered to measure if the investment is best suited to you or not. Seeking advice from a property adviser (buyers’ agent) will be the best way to buy the right property for you.
If you’d like some assistance sourcing a brand new or off the plan property, please don’t hesitate contact us.
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While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
December 2024
