Australian Property Market: Prices To Drop, Smaller Cities Thrive, and Consistency Rules

The Australian property market is expected to experience significant changes over the next 12 to 18 months, with property values predicted to fall by 15% by the end of next year, according to a report by A Current Affair1. This price drop, however, may not necessarily benefit first home buyers, as rising interest rates may make it more challenging to find affordable properties.

In contrast to the price drop, Hotspotting’s latest Price Predictor Index (PPI) for Autumn 2023 reveals highly segmented markets with varying outcomes across capital cities and local government areas2. Director Terry Ryder points out that, unlike the previous edition, there is no common issue running through the various markets across Australia2.

According to Ryder, smaller cities like Perth, Darwin, Adelaide, and key regions have delivered strong sales activity and price growth2. These smaller cities outshine big eastern cities like Sydney and Melbourne, which only account for 28 locales in the Top 100 Supercharged Suburbs2.

Furthermore, the PPI report finds that Western Australia and Queensland make up a large portion of Hotspotting’s Top 100 Supercharged Suburbs2. Ryder states, “The strength in the Perth and Regional Queensland markets means that 40 of the Top 100 are in WA and Queensland.”2

The popularity of smaller and more affordable units is on the rise, driven by the desire for affordable homes in inner-city areas2. Ryder explains, “If a well-located suburb has apartments at half the price of houses, or less, then it’s likely to have solid to strong demand from buyers.”2

In terms of luxury properties, the market is generally weaker across capital cities and major regional centers, with the exception of Sydney2. Ryder notes that some of Sydney’s most exclusive areas, such as the Northern Beaches, are experiencing a revival2.

As for consistency, Ryder mentions that many markets across Australia are recording fewer suburbs with rising sales activity but a greater number of locations with steady buyer demand2. This steady buyer activity over time tends to produce good price growth, making these markets ideal for investors2.

In conclusion, the Australian property market is facing a period of change and diversification. With property prices predicted to drop and smaller cities thriving, it is essential for potential buyers and investors to keep an eye on emerging trends and opportunities in the market.

References:

A Current Affair, “Property prices tipped to go into free fall.” ↩ https://9now.nine.com.au/a-current-affair/australian-property-prices-tipped-to-free-fall/39555b7f-03d9-4454-9030-cbc03abb7a6b

Henry Thai, “Top 5 trends in Australia’s real estate market,” Hotspotting Price Predictor Index (PPI) for Autumn 2023. ↩ ↩2 ↩3 ↩4 ↩5 ↩6 https://thepropertytribune.com.au/market-insights/top-5-trends-in-australias-real-estate-market/