Your Property Market Insights
A weekly look at the hot topics in real estate across the country…Dec 07 2024
Welcome to your weekly edition of Groundswell Property’s Market Insights, where we bring you the latest trends, research, and expert opinions shaping real estate across Australia.
In this issue, we’re diving into the data and trends shaping Australia’s property market as 2024 draws to a close. From the surprising performance of apartments outpacing houses in capital growth to the federal government’s game-changing housing initiatives and the latest price peaks across the nation, there’s plenty to unpack.
As always, our goal is to provide evidence-based insights to help you make informed property decisions—whether you're buying, selling, or simply keeping a pulse on the market.
Apartments Outperforming Houses, for Now…
A developing trend has turned upside down some of the long-held beliefs amongst real estate investors, that houses out-perform apartments on capital growth. There is now growing evidence that attached dwellings are mounting a strong challenge to houses.
It has long been believed that land content was the big thing in driving property values and that units lacked this quality. Increasingly, it’s clear that this theory about capital growth needs to be re-considered and to acknowledge that attached dwellings like apartments have qualities that houses don’t have and which are important to growing numbers of buyers.
The latest Housing Affordability Report, jointly released by CoreLogic and ANZ, has
observed that capital city unit prices increased more over the three months to October 2024, than did house prices over the same period. The growth difference was small, but it’s merely the latest in a growing set of figures showing the rising performance of units.
In the month of October, the median price growth for units was higher than for houses in the nation’s five biggest cities and also for the combined regions. This was also the case for the October quarter.
In annual terms, price growth has been better for units than houses in the three capital cities leading the nation on market growth – Brisbane, Adelaide and Perth. Units have also out-performed in the regional markets of Queensland, WA, NSW and Victoria.
The annual growth in median unit prices, according to CoreLogic, has been 18% in Adelaide, 19% in Brisbane and 24% in Perth. Those are spectacular increases and provide compelling evidence to disprove the notion that attached dwellings don’t perform on capital growth.
There are also growing numbers of suburbs around Australia where unit price growth is higher, both in the short-term and the long-term.
Take Noosa Heads on the Sunshine Coast, the five-year growth average is 10% per year for houses and 17% per year for units. At Surfers Paradise on the Gold Coast, it’s 8% per year for houses and 12% per year for units. There are many other similar examples across the nation.
REA Group, which publishes realestate.com.au, has recently highlighted locations where unit price growth is outpacing houses.
Megan Lieu, Economic Analyst at REA Group, says: “Historically, house values have risen at a faster rate than units, but with affordability pressures, units are being preferred by many homebuyers. In certain suburbs, unit prices have grown at more than double the rate of houses over the past year.”
Despite these more recent shifts, its important to consider the long-term fundamentals when choosing what type of property to invest in. Historically it has been the most in-demand type of accommodation in a particular location that has delivered the best combination of growth and cashflow – why? Quite simply: supply and demand
That’s why we must be conscious of this when making investment decisions. Would you buy an apartment in a far-reaching regional town where 95% of the population wants to live in and can afford a standalone family home? Probably not
Conversely, in a location like Bondi Beach where 86% of people live in and can afford a unit or apartment – that’s an entirely different story.
Being in tune with this will ensure you invest in property that has the greatest level of demand in any location. Remember that if it’s hotly contested when you buy, it’ll likely be hotly contested when you sell.
2 Key Moves By The Federal Government to Ease The Housing Affordability Crisis
Two key pieces of legislation that aim to help ease Australia’s housing crisis by helping buyers and renters have passed through Federal Parliament.
The first, the Help to Buy Scheme, is intended to help low and middle-income earners access housing with the Federal Government becoming an equity partner.
The scheme will be administered by Housing Australia and provide up to 30% equity for eligible homebuyers taking out a loan to purchase an existing home or up to 40% equity for a new home.
There will be 10,000 “places” every year for the next four years. Eligible buyers will only require a 2% deposit to access a home loan through the scheme.
The second piece of legislation will incentivise developers to push ahead with Build to Rent projects and ease the rental crisis.
It is expected to encourage the delivery of 80,000 rental homes over the next decade.
For build-to-rent operators to be granted tax concessions through the scheme, they will need to offer five-year minimum leases and no-cause evictions will not be allowed.
It ensures rents are capped at below 74.9% of market value or 30% of a tenant’s income, whichever is lower.
Real Estate Institute of Australia (REIA) president, Leanne Pilkington, says it is a “vital step in addressing the nation’s housing crisis”.
She says it will encourage institutional investors through tax benefits to deliver rental housing, including affordable tenancies.
“This is a significant step in stabilising the rental market but not the panacea; the role of small private investors will continue to be an integral part of the solution and the government needs to ensure tax settings remain the same; so as not to contract supply in this segment,” she says.
National Property Market Price Watch: Prices Hit Peak
National dwelling values hit a new peak of $800,000 in November following 23 consecutive months of growth.
The PropTrack Home Price Index shows national prices were up by 0.2% in November, While prices are continuing to grow, ProptTrack senior economist Eleanor Creagh says the pace of growth is slowing, partly as a result of new stock entering the market in some locations.
Perth, Adelaide and Brisbane remain the strongest capital city markets for annual house price growth (19%, 15% and 12% respectively).
while there was an increase of stock on the market during spring, levels are still below historic averages, with total stock on market remaining historically low as new listings are quickly absorbed amid strong buyer demand.
Creagh says whilethere was an increase of stock on the market during spring, levels are still below historic averages, with total stock on market remaining historically low as new listings are quickly absorbed amid strong buyer demand.
She says the “comparative affordability” in Brisbane, Perth and Adelaide is what is driving demand in those cities. “Although after the persistent strong growth, with home prices up around 80% over the past 5 years in each capital, that comparative advantage has been eroded,” she says.
The big takeaway there – the affordability advantage may no longer be the point of attraction for investors and homebuyers in the nation’s 3 top-performing cities. What will that mean for the next 12 months…watch this space and remember, that historically for every year of above-average growth, there will likely be a year of below-average growth or even decline until a market finds its true level.
That’s it for this week’s Your Property Market Insights. Whether you’re hunting for a suburb on the rise, or are keen to understand whats playing out in different markets across the country, staying informed is key.
Keep an eye out next week for more expert insights and the latest updates on Australia’s ever-evolving property market, and reach out for further insights or guidance tailored to your property journey.
Have a great weekend - Tom