The Australian Property Market: Current Trends and Potential Hot Spots

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Australia’s property market has experienced a range of trends across its states and territories. According to a recent report by Property Investment Professionals of Australia (PIPA), buyer confidence seems to be returning to the property sector (Zmtorrazo, 2023). Nicola McDougall, PIPA’s chair, explains that the recent rapid rate rise cycle by the Reserve Bank of Australia (RBA) might have been a shock for many borrowers, but there are positive signs for property conditions in the coming months.

New South Wales has shown resilience despite rate hikes, with Sydney property prices only dropping around 12-15% (Zmtorrazo, 2023). Rich Harvey, founder of Property Buyer, explains that the city’s market is driven by a lack of available stock, migration, and population growth. He forecasts a 10-12% increase in rents this year, attracting investors back into the market.

Melbourne’s market, on the other hand, is described as a “two-speed market” by Cate Bakos, a buyers’ agent at Cate Bakos Property. She notes that buyers remain disinterested in renovation and development projects, focusing on low level of listings in the renovated house segment. The rental market in the city has dramatically uplifted due to return-to-office mandates and an influx of international students.

Queensland’s housing market is under pressure due to a second wave of interstate migration driven by cost-of-living pressures (Zmtorrazo, 2023). Edward Reavy, founder of EKR Property, believes that once interest rates stabilize, owner-occupiers and investors will rush back into the market due to the state’s affordability, lifestyle, infrastructure spending, and job opportunities.

South Australia’s market continues to strengthen, with Adelaide’s property prices 5.1% higher than they were 12 months ago (Zmtorrazo, 2023). Peter Koulizos, a property expert at the University of Adelaide, attributes this growth to supply and demand factors, with a 12% decrease in property listings compared to last year.

Western Australia, on the other hand, remains relatively attractive and affordable due to low housing prices, strong income, and a robust labour market (Zmtorrazo, 2023). Damian Collins, managing director of Momentum Wealth, highlights the state’s significant undersupply of residential houses and rentals, which is expected to tighten as supply struggles to keep up with growing demand.

Tasmania’s market, despite strong underlying fundamentals, has experienced a slight decline in property values due to “buyer fatigue” (Zmtorrazo, 2023). Simon Pressley, head of research at Propertyology, suggests that this could be attributed to the state’s long growth cycle.

In an attempt to predict the next property hot spots, Jason Murphy, an economist and writer, highlights the latest ABS data on socio-economic status of areas. He points out that the top 20 areas in Australia are primarily in Sydney and the ACT, with high education levels and few residents in poverty.

In conclusion, Australia’s property market is a mixed bag of trends and opportunities across its states and territories. While some areas are rebounding, others are still reeling from the impact of rate hikes. By carefully analyzing market trends and socio-economic factors, investors and home buyers may be able to identify potential hot spots and make informed decisions in the coming months.

References:

Murphy, J. (2023). How To Pick The Next Property Hot Spot. https://www.forbes.com/advisor/au/property/how-to-pick-the-next-property-hotspot/ 

Zmtorrazo. (2023). A state-by-state insight into Australia’s property markets (post-rate hikes). https://www.smartpropertyinvestment.com.au/research/24660-a-state-by-state-insight-into-australia-s-property-markets-post-rate-hikes