Welcome to this week’s edition of Property Edge, where we dive into the latest trends shaping Australia’s property market. As spring rolls in, homebuyers are seeing a surge in listings across the country, providing more opportunities to secure a deal. In this edition, we’ll explore everything from the evolving buyer’s market in Sydney and Melbourne to predictions for Brisbane, Perth, and beyond. Plus, we’ll look at the rise of apartment demand and how recent market shifts are affecting prices and rents nationwide. Stay ahead of the curve with our comprehensive property guide.

Timing the Market: Suburbs Where Prices have Dropped

As property markets in some popular suburbs cool off, buyers have a chance to get into the market at a discount. Despite national home prices rising by 6% in the last 12 months and 44% since the start of the pandemic, PropTrack data reveals that dozens of suburbs have seen median sale prices drop by more than 20% from their peaks. These price corrections follow periods of strong growth, especially in regional and coastal areas that surged in demand during the pandemic.

The price drops are largely seen in lifestyle-focused regions such as Noosa, Byron Bay, and suburbs within commuting distance to Sydney and Melbourne. For example, Palm Beach in NSW saw a significant drop of 36.4%, with prices falling from $5.975 million to $3.8 million. In Sunshine Beach, QLD, median prices fell by 32% to $2.4 million, following fierce competition during the pandemic. Higher interest rates, reduced borrowing power, and a shift in demand back to cities have contributed to this cooling.

The following table highlights suburbs where house prices have fallen below their previous peaks:

The same trend applies to unit prices, where many suburbs have seen declines due to an increase in supply, particularly in areas with substantial new apartment developments. Albion in VIC saw a 48.8% drop in unit prices, while Ascot in WA experienced a 41.8% decrease.

While prices in these suburbs have dropped from their peaks, they remain higher than they were five years ago, and the supply of new housing is easing pressure in some areas. However, challenges such as high construction costs and interest rates may hinder the government’s target of building 1.2 million homes by 2029.

Spring Property Market: What to Expect

Spring is traditionally a time for growth, and Australia’s property market is reflecting this trend as the home-selling season kicks off strongly. Despite high interest rates, media. house prices have continued to rise in 2023 and 2024, driven primarily by a nationwide shortage of homes for sale, rental properties, and new builds.

The Federal government’s target of constructing 1.2 million new homes in five years is unlikely to be met, contributing to a tight property market. Record population growth, largely fuelled by overseas migration, and improved borrowing capacity due to mid-year tax cuts have added to demand. These factors suggest that house prices and rents will remain high, even with future interest rate cuts expected in late 2024 or early 2025.

Why Prices Remain High

The cost of building has risen by 53% in the past three years, with the average cost of a new home now nearing $500,000, excluding land. The shortage of homes, combined with high demand, is expected to keep prices elevated across the country. Additionally, when interest rates do eventually fall, borrowing capacity will increase, placing further pressure on prices.

Understanding Local Property Markets

There is no single ‘Australian property market.’ Different regions and cities have experienced varied results over the past year. Perth has led the way with house prices rising by more than 20%, while Brisbane and Adelaide have also recorded double-digit growth. In contrast, Melbourne’s market has stagnated, and smaller cities such as Canberra, Darwin, and Hobart have seen no growth or slight declines.

The Rise of Apartments

A key trend emerging is the growing demand for units, particularly among downsizers, first-time buyers, and migrants used to apartment living. In some locations, units are now challenging houses for capital growth. For example, in Surfers Paradise, unit prices have grown more rapidly than house prices, and units are selling faster, yielding higher returns.

The Rental Market and Future Projections

The rental crisis is expected to persist for several years, with continued upward pressure on rents. However, Louis Christopher of SQM Research believes the days of 10%-20% annual rental increases are over, as renters are reaching their financial limits. Despite this, rents are unlikely to drop in the near future.

‘Second-Wind’ Markets

Several areas that saw rapid price growth between 2020 and 2022 are now showing signs of recovery after a period of stagnation. These “second-wind” markets include parts of Queensland such as the Sunshine Coast and Hervey Bay, as well as regions in NSW, Victoria, and Tasmania. Melbourne, in particular, is predicted to experience a resurgence, driven by its strong economy and renewed population growth.

As the spring property season unfolds, the ongoing supply-demand imbalance and regional variations will shape the market, providing both challenges and opportunities for buyers and investors alike.

Surge in Listings Eases Pressure for Home Buyers

Home buyers in Australia’s largest cities are seeing relief as a surge in property listings ahead of spring offers more options and less competition. The increase in listings is expected to give buyers greater negotiating power, with sellers advised to be more flexible on price and settlement terms.

Data from SQM Research shows significant jumps in available properties, especially in Sydney, Melbourne, and Canberra, marking the highest levels in many years. Sydney saw the largest monthly rise, with listings up 14.7% in August, totalling 33,790 homes—up 20.2% from the same time in 2023. Melbourne followed closely with a 12.2% increase, bringing 41,729 properties to market, a 22.8% rise from last year.

SQM Research Director Louis Christopher noted that both Sydney and Melbourne are now “buyer’s markets” due to the slowdown in housing demand and increased caution from buyers. This trend is expected to continue, offering significant choice for home seekers as spring progresses.

While other capitals such as Canberra and Adelaide also experienced growth in listings, with Canberra showing a 31.7% year-on-year increase, cities like Perth saw a decline, tempering national figures. Across Australia, residential property listings rose by 7.9% for August and 11.1% for the year, bringing the total to 249,523.

Experts believe that while prices are unlikely to crash, there will be good deals available, particularly in Sydney and Melbourne, where listings are at their highest in years.

Spring 2024 Property Market Outlook: Where to Buy Across Australia

Here’s what experts expect for the spring property market across Australia’s major cities:

Sydney

Sydney is set to have a busy spring with a 12.3% increase in new listings and a 17.4% rise in total listings compared to last year. Although demand is still strong, buyers are becoming more selective, and sellers may need to adjust their expectations. House prices in Sydney have risen by 6.77% year-on-year (YoY) to $1.429 million, while unit prices are up 3.89% to $830,000.

Melbourne

Melbourne has experienced even larger increases in listings, with new listings up 14.6% YoY in July, and total listings rising 21.7%. Despite these increases, buyer activity remains healthy, with a high clearance rate of almost 80%. House prices in Melbourne dropped slightly by 1.01% YoY to $912,000, while unit prices saw a small increase of 0.18% to $619,000.

Brisbane

Brisbane continues to be a hot market, with new listings up 16.1% YoY in July. House prices in Brisbane rose by 13.42% YoY to $951,000, and unit prices increased by 16.85% to $663,000. Buyer demand remains strong, though sellers may need to be cautious with pricing due to the influx of new listings.

Adelaide

Adelaide is expected to see more homes hit the market this spring, with new listings up 17.4% YoY. However, total listings remain 6.9% lower than last year, reflecting continued constraints on supply. House prices in Adelaide have risen by 15.09% YoY to $819,000, and unit prices have increased by 12.44% to $599,000.

Perth

Perth’s market remains tight despite a 15.3% rise in new listings. Total listings are still down 20.2% YoY, keeping demand high. House prices in Perth have surged by 23.19% YoY to $790,000, and unit prices are up 19.13% to $530,000. High population growth and limited supply continue to strain the market.

Hobart

Hobart offers more options for buyers, with new listings up 5.5% YoY and total listings increasing 14.4%. However, house prices have fallen by 2.4% YoY to $717,000, and unit prices are down 0.9% to $552,000, making Hobart one of the more buyer-friendly markets.

Darwin

Darwin is seeing increased activity, with new listings up 12% YoY. House prices have risen by 3.54% YoY to $560,000, though unit prices have decreased by 2.76% to $382,000. The market is expected to stay active throughout spring.

Canberra

Canberra stands out with the largest increase in total listings among the capital cities, up 33.7% YoY. New listings have also risen by 16.2%, providing more choice for buyers. House prices have increased slightly by 0.94% YoY to $980,000, while unit prices are down 0.32% to $607,000.

With more properties coming onto the market this spring, buyers across the country will have increased opportunities, though rising demand and economic conditions will continue to shape the market.

That’s it for this week’s Property Edge! Whether you’re a seasoned investor or a first-time buyer, the evolving spring market offers plenty of opportunities. Keep an eye on the latest property trends, and be sure to leverage the surge in listings to find the right deal. We’ll be back next week with more insights to help you navigate the fast-moving world of real estate. Until then, happy house hunting!

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