Key takeaways

The Australian housing market is currently so undersupplied that I have rarely seen a supply-demand inflection point like this. It’s only going to get worse.

There are a number of unknowns and risks ahead for our housing markets, but there are also five certainties:
1. RBA expects inflation to persist for a little while longer
2. There will be a decline in interest rates
3. Rental and purchase housing will remain scarce for some time to come.
4. There will be an increase in rents
5. Housing demand will continue to be fuelled by the impressive demographics and strong population growth.

In this way, there is a window of opportunity before falling interest rates result in a resetting of the property market.

There is little doubt that inflation and interest rates have peaked, and in due course consumer confidence will return and the markets will resume their upward trajectory.

In 2024, watch out for these trends:-
1. There will be a continuation of the recovery phase of the property market cycle.
2. Rates will eventually fall, but this may not happen until later this year or early next year.
3. There will be more fragmentation in our property markets.
4. Immigration will continue to underpin our housing markets.
5. There will be a continuing rise in rents.

6. Property market investments will continue to be made by strategic investors.
7. The importance of living in the right neighbourhood will increase.
8. There will be growth in employment and a robust economy.

• How do you see the Australian property market for the rest of 2024? 
• Is the RBA going to raise rates again in 2024 or have interest rates peaked now?
• In 2024, will affordability issues result in distressed sales and falling prices or even a property market crash? 

After 13 months of rising values in the housing market, people are asking these questions.

Our housing market has defied the many doomsday forecasts and entered a V-shaped recovery early in 2023, making the 2022 downturn one of the sharpest and shortest on record.

With home prices hitting fresh record highs in many markets, the price upturn has now been entrenched for 15 months.

During this period, auction clearance rates are consistently showing the depth of our major capital city housing markets, and FOMO (fear of missing out) is creeping in as house prices reach new peaks.

Consumer sentiment and auction results have historically shown a strong correlation with future housing prices.

Each state is at its own stage of the property cycle, and each capital city has multiple markets.

While some regional areas outperformed the capital cities in 2022, capital city property markets have led the price upturn in 2023 and regional areas had slower growth.

Overall, persistently low supply relative to demand are supporting arising housing values despite high interest rates, ongoing cost of living pressures, worsening affordability pressures and a deeply pessimistic level of consumer confidence.

And after underperforming throughout the pandemic period, unit prices recorded stronger growth for much of 2023 and are still growing strongly this year as affordability constraints will mean more Australians trade backyards for balconies and courtyards.

Here’s what the big four banks forecasting for property prices in 2024

• According to ANZ, capital city housing prices will rise by 6-7% in 2024, 5-6% in 2025, and around 5% in 2026. As a result of a longer-running shortage of available homes, Brisbane, Perth, and Adelaide are likely to outperform other cities. Household incomes are expected to rise (first due to fiscal policy) from late 2024 onward.

• According to ANZ, capital city housing prices will rise by 6-7% in 2024, 5-6% in 2025, and around 5% in 2026. As a result of a longer-running shortage of available homes, Brisbane, Perth, and Adelaide are likely to outperform other cities. Household incomes are expected to rise (first due to fiscal policy) from late 2024 onward.
• CBA expects capital city prices to rise by 5 percent, with small variations across cities. According to forecasts, Brisbane will grow by 6%, Melbourne and Perth by 5%, Sydney by 4%, and Adelaide by 1%.
• According to NAB, prices will rise by an average of 5.4% across the capitals. Brisbane prices are expected to rise by 6.5 percent, Perth and Adelaide prices will rise by 6.2 percent, Melbourne prices will rise by 5.5 percent, and Sydney prices will rise by 5 percent. Values in Hobart are expected to remain flat for the remainder of the year.
• According to Westpac, the combined capitals will grow by 6 percent. According to forecasts, Perth will grow by 10 percent, followed by Brisbane at 8 percent, Sydney at 6 percent, Adelaide at 4 percent, and Melbourne at 3 percent

There is always a way to beat the averages.

Although there’s a likelihood that property prices will grow a little more slowly in 2024 than they did last year, the good news is that investing in the right property in the right location can always beat the national average.

The next hotspot isn’t what I mean by that.

In other words, I mean buying quality properties in gentrifying suburbs that will outperform over time.

With property, you can increase your results by using your own time, skills, and knowledge – so don’t settle for average.

There’s more to it than just location. It is possible to add value to a property by renovating or redeveloping it.

In three years, Oxford Economics forecasts the following house price levels.

How can values continue rising amid high interest rates?

Clearly affordability has decreased, but the housing markets are being underpinned by a number of factors:

• Wealthy buyers entering the market with higher deposits.
• Downsizers who had a lot of equity in their homes are buying debt free – in fact a third of properties last year were transacted with no mortgage at all.
• The bank of mum and dad and inheritances are helping many buyers with a deposit.
• Some buyers are buying in cheaper markets while others are buying units rather than houses.
• The property room of 2020-21 left many homeowners with significant equity in their homes.

The latest housing market stats

Dwelling values have remained robust as CoreLogic’s national Home Value Index rose 0.6% in February, the strongest monthly gain since October last year.

Here are the latest stats provided by CoreLogic for property price changes around Australia:

As a matter of fact, all research houses reported higher dwelling prices in March 2024:

• Home values in Australia continued to rise in May, with CoreLogic’s national Home Value Index (HVI) rising 0.8%, the biggest monthly gain since October last year and the 16th consecutive month of growth.
• In May, PropTrack reported that national home prices rose 0.3%. They have now risen 6.68 % from May 2023 levels and 9.5 % from December 2022 levels.
• According to Dr Andrew Wilson’s My Housing Market, national housing markets recorded steady price growth in May, with the late autumn selling season generally providing positive outcomes for most sellers. In the May quarter, the median house price in the national capital city increased by 0.3% to $1,134,494.

A good leading indicator for the property market is “Asking Prices”, which reflect seller sentiment and expectations for the future value of their home.

Australian property prices: the fundamentals

There are a variety of factors that influence property prices, and as we move through property cycles, they all come into play.

Property values will be driven by a number of factors that tend to boil down to two basic economic concepts: consumer confidence and supply and demand.

It is crucial for one to understand how these concepts work together to affect real estate in the future.

Conversely, if we take a telescopic view rather than a microscopic view of housing over the next decade or two, we will see that demographics (how many of us there are, what we want to live, where we want to live) and wealth will be the two biggest factors driving housing markets.

To begin with, let’s explore some of the key underlying factors that will influence our property markets in the medium term.

1. RATES OF INTEREST/AFFORDABILITY

In spite of many people believing that interest rates are a key driver of property values, and that’s why so many pessimistic property forecasts were issued during the rise in interest rates during 2022-23, our housing markets proved extremely resilient and continued to grow despite 13 interest rate hikes from the RBA.

The fall in interest rates and the subsequent increase in affordability are certainly powerful drivers of property price growth, but the reverse is not true.

In addition to interest rates, many other factors influence house prices.

Earlier this year, Australia’s largest lender, the Commonwealth Bank, predicted six interest rate cuts in 2024 and 25 starting in September, but it appears rates will stay high for a longer period of time as inflation remains stubbornly high and our economy and labour markets continue to perform better than the Reserve Bank would like.

In 2024, economists are divided about the timing and number of RBA rate cuts. Some predict three, while others predict none.

For borrowers who have large debts compared to their incomes, the difference between no rate cuts, and up to three rate cuts, can be a huge factor.

2. SUPPLY AND DEMAND

In the short term, housing supply affects house prices greatly: an undersupply causes prices to rise, while an oversupply causes them to fall.

Our lack of new housing construction has led to low vacancy rates and higher house prices despite very strong population growth through 2023.

The strong absorption of new listings for sale has suppressed the total number of listings in the market, intensifying competition among buyers.

A shortage of housing has resulted, outweighing the negative impact of rates on prices.

And there is no end in sight as building approvals (which are a good indication of future supply) are running at very low levels.

And just because a new apartment complex has been approved, it doesn’t mean it will get built.

At the moment very few new complexes are coming out of the ground because it’s not financially viable to build them at today’s market prices.

Of course, this means future new developments will have to sell at prices considerably higher than today’s market value and this will, in turn, pull up the value of established apartments.

3. CONSUMER CONFIDENCE

Consumer confidence is a critical factor affecting the direction of property prices.

We won’t make big financial decisions like moving home or buying an investment property unless we feel confident about our economic future and our financial stability.

2023 was a year where consumer confidence was at historic lows because of all the economic and socio-political issues that confronted us.

I believe that during 2024 consumer confidence will rise as inflation slowly comes under control and we realise interest rates have peaked and are going to eventually fall.

At the same time, the “wealth effect” a very improving economy and rising property values will lead to further consumer confidence and bring home buyers and sellers back into the market.

4. ECONOMIC CLIMATE

Another key factor that affects the value of the property market is the overall health of the economy.

This is generally measured by economic indicators such as the gross domestic product (GDP), employment data, manufacturing activity, the prices of goods, etc.

Broadly speaking, the economy is strong and the RBA is trying to slow it down to bring inflation under control, but currently, everybody who wants a job can get a job and this will underpin our housing markets even if the economy falters a little moving forward.

5. POPULATION GROWTH

Australia has experienced a record-breaking rate of net overseas migration, estimated to have reached around 500,000 people in the 12 months to September 2023.

While population growth has always been a key driver supporting our property markets, the influx has pushed our supply/demand balance off-kilter and is key to the increase in housing prices and the shortage of rental properties.

6. AVAILABILITY OF CREDIT

When the credit (the ability to borrow from the banks) is readily accessible, with lower interest rates and less stringent lending criteria, it tends to stimulate the housing market since more people find themselves able to borrow money to buy homes, leading to increased demand for housing.

On the flip side, when credit is tightened through higher interest rates or stricter lending criteria (as happened when APRA made the banks tighten the purse strings in 2016-7), the effect can be a cooling of the housing market.

Such measures are usually a deliberate policy response to an overheated market, aiming to reduce the risk of a “property bubble” and subsequent crash.

7. INVESTOR SENTIMENT

This sentiment, essentially the collective attitude and outlook of investors towards property markets, can significantly influence both the demand for and the value of real estate.

Investors generally account for around one-third of all property transactions so positive investor sentiment can drive up property prices, especially in sought-after areas.

Conversely, negative investor sentiment, as occurred during the market downturn of 2022, can lead to a decrease in property values.

If investors believe that property prices will stagnate or fall, they may be less inclined to invest, or they might choose to sell off their properties, increasing supply in the market.

8. GOVERNMENT INCENTIVES

Government incentives can have both direct and indirect impacts on the real estate sector.

One of the most direct ways government incentives affect property values is through policies aimed at stimulating demand.

For instance, initiatives like the First Home Owner Grant (FHOG) or stamp duty concessions for first-time buyers directly increase buying capacity, leading to greater demand for property.

Another aspect is the development incentives provided by the government to promote specific types of property development, such as high-density housing or urban renewal projects.

These incentives can increase property values in targeted areas by improving infrastructure, accessibility, and community facilities, making them more desirable places to live.

Tax policies and regulations also play a crucial role.

Negative gearing can increase demand for investment properties, pushing up prices.

And every time there is talk about removing negative gearing or amending taxes including land tax, investors shy away from our housing markets.

• $3.5 billion Big Build spend for Wide Bay in 2024-25
• $952 million for the Wide Bay Hospital and Health Service
• $786 million towards the Queensland Train Manufacturing Program

New Premier Steven Miles first budget is delivering for the quickly growing Wide Bay region, with more investment into health, infrastructure and education thanks to the 2024-25 Queensland Budget.

The 2024-25 Queensland Budget features a nation-leading $11.218 billion in concession and rebates to provide cost-of-living relief to Queenslanders, alongside a record $107.262 billion capital program for infrastructure statewide.

The Miles Government is putting major infrastructure into the spotlight with Queensland’s Big Build Spend for the region increased to $3.5 billion, generating 9,400 jobs in the Wide Bay.

The Bruce highway will benefit from major upgrades with $5.6 million in 2024-25 to go towards the Tiaro Bypass, and $110.6 million in 2024-25 to construct a new 26km, four-lane, divided highway between the existing Bruce Highway interchange at Woondum, south of Gympie, and Curra.

The regions rich rail history will be celebrated with $786 million going towards the Queensland Train Manufacturing Program, including a purpose-built manufacturing facility at Torbanlea which will deliver 65 new six-car passenger trains.

Community Safety is also front and centre with this Budget dedicated to improving frontline police services.

Including $4.1 million to complete the upgrade of the police facility at Maryborough, $15 million upgrade and enhance the function of Hervey Bay and Bundaberg police stations and additional funding to deliver additional aerial enforcement capabilities.

Premier Miles is continuing to invest in health with a $952 million investment for the Wide Bay Hospital and Health Service to deliver even better access to healthcare across the region.

$68.1 million in funding is to progress the new Bundaberg Hospital which will have more than 400 beds, increasing the number of overnight beds in the region by 121 and an $8.8 million investment towards delivering the new alcohol and other drugs residential facilities in Bundaberg, providing a service that is voluntary for people aged 18 years and over who want to make positive changes in relation to alcohol and other drug use.

As part of the Queensland Energy and Jobs Plan, $116.4 million will go towards the Southern Renewable Energy Zone Battery. The battery will have the capacity to supply 300 megawatts (two hours) of energy into the National Electricity Market, making it one of the largest battery energy storage systems in Queensland.

The Miles Government is continuing to invest in education and will provide $79 million to maintain, improve and upgrade schools in the wide bay, as well as $4.75 million to construct additional specialist classrooms at Kepnock State High School and upgrade the amenities at Biggenden State School.

As stated by the Premier Steven Miles:

“I am doing what matters for Queenslanders delivering the largest investment into Queensland Health services, infrastructure and frontline workers in the state’s history.

“My first budget as Queensland’s Premier is helping unlock the Wide Bay’s potential, from protecting the important heritage of this region to ensuring safe and secure water supplies, new hospitals and upgraded roads and schools.

“I am also delivering more frontline services for the Wide Bay with extra nurses, extra doctors and more ambulance officers.

“I will always put Queenslanders first and do what matters most to them.”

As stated by the Treasurer and Minister for Trade and Investment Cameron Dick:

“With more than $950 million for Wide Bay healthcare, we’ll hire more doctors, nurses and ambos for the region, adding to the 192 extra doctors and 564 extra nurses our government has delivered since 2015.

“With $59.1 million out of a $162.6 million total spend to provide 6,500 training places for eligible Queenslanders who are passionate about healthcare to study the Diploma of Nursing our increased health spending is about ensuring that we provide better services and that Queenslanders can get access to the medical care they need.

“Our ‘Big Build’ infrastructure spend will also support around 9,400 jobs across the Wide Bay and is helping grow the region’s economy by investing in health infrastructure and providing cleaner, greener energy for the community.

“This Budget continues our commitment to improving outcomes for students and teachers in the region, we are upgrading schools in Biggenden and Kepnock to provide these communities with better facilities to enable students to thrive.

“We are also improving accessibility to learning opportunities with new learning spaces, free kindy and fee-free TAFE.

“We are bolstering the Australian Government electricity bill relief by $1,000, meaning that Queensland households will receive $1,300 off their electricity bills.

“This budget was made with Queenslanders in mind, and we will do what matters most for them.”

As stated by Bruce Saunders, Assistant Minister for Train Manufacturing and Regional Roads and Maryborough MP:

“New Premier Steven Miles’ first State budget is doing what matters for Maryborough.

“This Budget will deliver $765 million towards the Queensland Train Manufacturing Program, building a new purpose-built facility at Torbanlea and an additional 65 six-car passenger trains.

“This funding secures local well-paid manufacturing jobs in Maryborough right now and into the future.

“When David Crisafulli and LNP were last in government, Maryborough’s manufacturing heartland was gutted and our region lost hundreds of local jobs.

The LNP does not back local manufacturing and they don’t back Maryborough.”

“The Miles Government’s Budget has delivered even more for our community with a sharp focus on cost of living relief, major infrastructure investment, and job creation for Bundaberg locals.

“Delivering large-scale health and education projects means that this budget has set a blue-print for better services and skilled employment opportunities across the region.

“This is what Labor Governments do, invest in services, invest in infrastructure, and deliver better outcomes for Queenslanders living right across our State.”

As stated by Adrian Tantari MP Member for Hervey Bay:

“I’ll always stand up for the Hervey Bay and fight to get our fair share of funding and infrastructure to keep up our growing region’s needs.

“That’s why I’m so pleased with our new Premier Steven Miles’ first budget which delivers what matters for the Hervey Bay.

“With $28 million for a new Hervey Bay Police Station, $40 million for the Hervey Bay Hospital Expansion and land secured for a new Hervey Bay Fire Station, our new Premier Steven Miles is committed to building a better Hervey Bay.

“But this is all at risk under David Crisafulli and the LNP who have outlined no plans for the Hervey Bay and have neglected our region before.”

Other Wide Bay Budget investments include:

• $17.1 million in 2024-25 to support the delivery of the Bundaberg East Levee
• $8.2 million in 2024-25 to upgrade the intersection between Hervey Bay road and Pialbla – Burrum Heads road.
• $109.6 million to continue planning and enabling works for a new Paradise Dam wall.
• $50.2 million in 2024-25 to replace and refurbish handling equipment and infrastructure at Meandu Mine.

PropTrack data suggests Toowoomba real estate market prices in 2028

There is a possibility that the median house price in four Toowoomba suburbs could exceed $1 million within the next five years, according to new data.

REA Group’s PropTrack has revealed how the local property sector may look by 2028 based on its analysis.

Housing affordability remains a persistent problem in Australia’s real estate market.

In recent years, this trend has spread to regional areas such as Toowoomba, where the median house price in wealthy suburbs such as East Toowoomba ($1.388m), Highfields ($1.11m), Middle Ridge ($1.141m) and Kleinton ($1.003m) could exceed seven figures within five years.

A further two areas, Westbrook ($952,000) and Mount Lofty ($956,000), may also be closing in on the figure.

According to PropTrack data, North Toowoomba might have the lowest median price by 2028, at $513,000.

Toowoomba’s growth has been “unusually” strong since the start of Covid-19, according to PropTrack senior economist Angus Moore.

“Over the past five years, home prices in the Toowoomba region have increased by just over 52 percent, compared to 58 percent for regional Queensland overall,” he added.

Although the growth has been a little slower than some other regional Queensland areas, the broader point is that all of these areas have experienced very strong growth.

During the pandemic, we saw very strong demand for homes in southeast Queensland, driving prices up very rapidly.”

It is Toowoomba’s continued growth over the past year that sets it apart from other areas at a time when interest rates are on the rise.

According to him, “we are still seeing strong demand support prices.”.

In the past year, Toowoomba’s prices have risen a bit over 8 percent, which is much stronger than what we have seen in much of the country, where prices have fallen as interest rates have increased.”

Despite stating that the 2028 forecast could be realized, Mr Moore suggested that some heat would eventually leave the market.

“The rapid pace of growth in the past five years – and what it would mean for median prices if it were to occur again – demonstrates how unusually strong the past five years have been,” he stated.

In regional Queensland, including Toowoomba, prices have increased by more than 50 percent since the pandemic began.

To provide some context, prices nationwide increased by 23 percent in 2021 alone.

In 140 years, since 1880, that is the third fastest year of price growth.

This is clearly an unusual growth rate, and we are unlikely to see it again in the near future.”

A new shopping, medical and entertainment precinct has been planned for a fast-growing community east of Toowoomba and one of the tenants has already been identified.

One of the fastest-growing communities in the Lockyer Valley could get even bigger, after plans were lodged with the Locker Valley Regional Council to build a new bulk retail, entertainment and medical precinct at Plainland.

Applicant Plainland Crossing submitted the proposal last week for the 13,000 sqm site, which would include space for five major uses and 160 car parks.

Dubbed Plainland Home and Life, the development will include a bulk retail area, indoor entertainment space, medical centre, shop and food outlet.

One tenant in Pet Stock has already been identified as part of the development application.

The development is next door to the new Bunnings Warehouse and Aldi supermarket and forms part of a major cog in the commercial precinct of Plainland as it expands rapidly.

Hundreds of lots have either been sold or are on the market.

More are to be released in the coming years.

Other major commercial developments to come include a massive expansion of the existing Plainland Plaza to about five times its current size.

According to the planning report by Development Directive, the project would cater to the immediate community being created at Plainland.

“The proposed development represents the highest and best use for the site, as it caters for a range of users and provides additional services and amenity to the residents of Plainland,” the report said.

Reports were also submitted with the application into waste management, traffic impacts, engineering and landscaping.

The Lockyer Valley Regional Council has yet to respond to the application.

There is endless discussion and debate over the state of the Australian housing market around the office cooler, dinner table, and in the halls of parliament. 

In particular, housing affordability is now a major concern for many Aussies trying to buy a home. 

Many factors affect property prices and the broader housing market, including global and local economics, housing legislation, tax policies, development incentives, migration and demographic changes, and lending requirements.

What is the outlook for the Australian property market?

Despite ongoing economic headwinds, the Australian property market continues to grow. 

Despite high inflation, rising interest rates, reduced borrowing capacity, and increased cost-of-living pressures, property prices rose over successive quarters in 2023.

According to Domain data, house prices fell modestly in Melbourne in the first quarter of this year, but they rose in Sydney and all other capital cities except Darwin.

In most capitals, house price growth has slowed, suggesting that the wider property market is losing momentum.

According to experts, the underlying fundamentals of the Australian property market – chronic undersupply of new homes, strong population growth, and a tight rental market – will continue to support demand.

Housing supply will continue to be constrained in the near future as new dwelling approvals plunge to a near 12-year low.

It is likely that a reduction in the cash rate by the Reserve Bank of Australia would stimulate housing activity, while an increase would have the opposite effect. 

Many buyers in the market now rely on other sources of financing than home loans, such as family help or cash.

“I wonder if the buyers who have been propping up the housing market will run out if interest rates stay at these high levels indefinitely,” he says.

What are the steps I need to take to get into the Australian housing market?

Getting on the property ladder is no easy feat, and buying your first home can be a challenging experience. 

Among the topics covered in Domain’s first-home buyer’s guide are understanding finance language, setting a budget, and securing a mortgage. 

But first, you will need a deposit. If you can’t afford a full 20% deposit, there are several ways to buy. It’s possible – and somewhat common now – to buy with just 10%, or even 5%, but you must understand both the risks and rewards of doing so. 

For lower deposit amounts, banks can offer lenders mortgage insurance (LMI), which  is insurance for the bank in case of default. You may have a parent who would be willing to act as guarantor using equity they have on their own property, or you may be able to access one of the government grants, schemes or discounts.

It is important to know what you can and cannot do when it comes to housing. Consider “rentvesting”, buying in a bridesmaid suburb or teaming up with a sibling or friend. You can obtain pre-approval from a lender or mortgage broker before starting your property search to ensure you know your limit and can move quickly to secure a property. 

A mortgage broker can offer advice on saving strategies and tell you what banks look for when approving a loan early in the process.

Once you have pre-approval, it’s time to create a buying brief (your location, budget, preferred property type, “must-haves”, “nice-to-haves” and immediate red flags) and start researching and inspecting properties. Modify your brief based on recent sales in your price range and preferred areas.

In 2024, will house prices drop?

In the first quarter of the year, capital-city housing prices reached record highs in Sydney, Brisbane, Adelaide, and Perth, but declined in Melbourne and Darwin. The combined regional median house price also fell 1%. 

As a result of rising costs of living, high interest rates, and reduced borrowing power, the overall rate of house price growth has slowed down in recent months.

Domain chief of research and economics Dr Nicola Powell says quarterly gains are about three times slower than the previous quarter. 

However, she adds, it is unlikely to translate into significant price drops this year.

“Prices are still rising, and what it highlights is the lack of supply across the country – and when you consider that building approvals are at 12-year lows, that undersupply will continue to cause pricing pressure.”

What is the best suburb to invest in?

A property’s location is a big part of the investment process and your overall strategy. It needs to suit your goals and budget, and it needs to make financial sense.

When searching for the best suburb to invest in, many experienced and new property investors seek the advice and guidance of an industry professional. 

It is still possible to find a place to live across the country even on a first-time homebuyer’s budget. 

Investing in properties in another state or region should not deter investors, says Luke Harris, chief executive of Property Mentors. 

Some people find peace of mind in driving past it. “But that’s why you have a property manager. Take the emotion out of it. Buy in the suburb that makes sense.”

When looking at prospective suburbs, dive into the data. Take a look at a suburb’s current and historic median house and apartment prices, as well as recently sold properties, if you’re looking for capital growth or rental income. Rental vacancy rates can help you estimate the income a property can generate, while median rental prices can suggest how strong or weak the local rental market is.  

Investors can access Domain’s house price reports, rental reports, and other relevant information.

Local amenities like schools, shopping centres, parks, and healthcare facilities can all increase the value and desirability of a rental property. Due to the large workforce that is likely to be seeking homes nearby, suburbs close to hospitals are attractive.  

Inquire about future development plans in the area and how they might affect your property as well.

What is causing the rise in Australian house prices?

Demand has continued to outstrip supply, despite stretched affordability and high interest rates. 

According to Powell, “we’ve seen strong, strong rates of population growth run into undersupply of housing and a very tight rental market.”.

Despite rising building costs and planning delays, new building approvals have fallen to a 12-year low. 

In addition, recent buyers were likely to have equity, cash, or family assistance. 

According to Jarden chief economist Carlos Cacho, “the average household is no longer able to afford the average home, so home buyers are skewing much higher in income and wealth.”

CBA’s home borrowers now have a combined income above $200,000, he says, as well as a shift towards buyers with larger deposits and a drop in those with low deposits.

According to him, much of that would be intergenerational wealth transfer.

• Property values are surging in regional Queensland due to population growth and a shortage of homes. 
• Beaches, hot weather, and “bang for your buck” properties are among the drawcards of Wide Bay. 
• Property analysts predict the trend will continue.

Queensland’s coastal region is experiencing the largest growth in property prices in Australia, as prices soar across the state.

CoreLogic’s latest report shows that property prices in the Wide Bay region, which includes Bundaberg, Hervey Bay, and Maryborough, have increased 65-75 percent in five years.

The Wide Bay has a number of “incredibly exciting ingredients”, according to property analyst Simon Pressley.

Housing costs combined with lifestyle are definitely a major draw for people looking to relocate from big, congested cities such as Sydney and Melbourne.

There is also the best weather in the country, I would argue.

“It’s an economic story, a lifestyle story, and a housing shortage story.”

Drawcard: what is it?

Locals attribute the boom to the region’s beaches, good weather, and large backyards.

After putting two houses on the market in recent years, Bundaberg builder Jake Chappel experienced the growth at work and personally.

“It was nice to be on the selling side,” he said.

Although I am sorry for some of these younger people who are buying now, I don’t think [prices] are slowing down.

In the beginning, it was probably because of cheap land and cheap properties.

“We have a good climate. It’s a bit hot at the moment, but it’s usually pretty liveable, pretty comfortable.”

In comparison to the [Gold and Sunshine] coasts and Brisbane, we still have great beaches and friendly people.”

Growth in the market

Over the past five years, Bundaberg property values soared almost 75 per cent to a median value of almost $480,000, according to a CoreLogic report.

There had been an increase of more than 67 percent in Hervey Bay to over $615,000, and an increase of almost 66 percent in Maryborough to almost $395,000.

With a median value of over $965,000, the Sunshine Coast outperformed the Gold Coast region which is sitting at more than $928,000.

A strong population growth in Queensland is fueling the high prices, according to CoreLogic’s head of research, Tim Lawless.

He explained that when housing values rise, it’s generally due to a mismatch between supply and demand.

Most of that migration is interstate, so more people are coming to Queensland from NSW and Victoria.

Also, internal migration rates are continuing to increase as more people seek regional housing or move to the regions because jobs are growing or housing is more affordable.”

However, Mr Lawless said high property prices were not good news for everyone.

Everyone who owns a home has seen their equity grow quite a bit,” he said.

On the other hand, affordability is becoming increasingly difficult for those without homes.

“Household incomes haven’t increased anywhere near that amount.”

Preparing to pay a premium

Despite the data, veteran Gold Coast real estate agent David Hamilton was not shocked.

Based on his work, he cannot see the market slowing down anytime soon.

The big jump occurred during the COVID years. The trend is expected to continue,” Hamilton said.

An increase in interstate arrivals cashing in on the Gold Coast market has only added to the already tight market, he believes.

According to Mr Hamilton, we’re no different from Byron Bay, the Sutherland Shire, or the eastern suburbs of Sydney.

People want to live here, to be close to the beach, and they’re willing to pay a premium for that.”

In the past quarter, regional property prices have outperformed capital city markets, led by Western Australia and Queensland.

In a trend rarely seen outside the Covid years of urban escapism, regional property prices are now outpacing capital city prices.

Western Australia and Queensland have seen double-digit annual growth in their migration magnets, driving the reversal of fortunes between cities and regions.

Regional Australia’s dwelling values increased by 1.2% in the three months to January 2024, while the capital cities’ increased by 1%.

In Australia’s 50 largest significant urban areas (SUAs), capital growth remains varied, but WA and Queensland are among the standout performers.

Albany and Bunbury, coastal towns in WA, recorded value growth of 7.7% and 6.2% respectively, ahead of Northern NSW’s Lismore (5.5%) and Townsville (4.7%).

Six SUAs experienced an annual increase of 10 percent or more, including Bunbury (15.8 percent), Bundaberg (12.0%), and Rockhampton (12.0%).

Five regions are selling properties faster, with median time-on-market below 20 days in five regions.

Queensland’s Bundaberg (15 days) had the shortest median time on market, followed by Toowoomba (17 days), WA’s Bunbury (18 days), Busselton (19 days), and Cairns (19 days).

Similarly, Batemans Bay, NSW (75 days) continued to record the longest median selling time, while Bowral-Mittagong, NSW (-6.7%) offered the largest discounts.

There were almost half of regional sales between $400,000 and $600,000 in the most recent month measured, November.

This year’s sales volumes are well down from last year’s peak for the same month.

The characteristics of regional hotspots are similar

There was a correspondingly strong performance in the property market in regional cities and towns that attracted population growth.

In Western Australia, Busselton was the top performing regional centre for the December 2023 quarter, according to the latest data from REIWA. According to REIWA President Joe White, prices in Busselton have increased by 4.2% to $715,000 from $686,000 in the September quarter. As people look to get off the rental roundabout and buy a home, the rental shortage is driving the lower end of the market.

„Population growth and the rush to the regions are the other factors. The state is seeing strong population growth overall and the fantastic South-West lifestyle continues to draw people to Busselton.

Busselton has seen a large influx of FIFO workers and their families since three mining companies left.

This year’s sales volumes are well down from last year’s peak for the same month.

Sales in the December quarter were 19.0 percent higher than the September quarter, and 5.3 percent higher than the same period in 2022, reflecting the high demand for homes.”

According to the data, the current regional property upturn is not part of a wider cycle of large ups and downs.

With a median house sale price of $523,086, Port Hedland recorded the highest annual growth among WA’s nine broadly defined regional markets. The median house sale price in Bunbury increased by 9.5 per cent over the year, making it the next best performer.

Over the next two years, Townsville may have one of the strongest growth rates in Australia, according to Knight Frank Senior Partner Townsville and Mackay, Craig Stack.

Over the next two years, we expect the median sale price for existing homes to rise very strongly due to the low supply of existing homes in Townsville.

As people move to the region to work on major projects beginning in 2024, Townsville’s median house price may become one of the strongest in Australia due to an imbalance between demand and supply.

In each of the past three years, median prices have increased by five to seven percent, but growth rates might reach 10 percent next year, especially if interest rates fall.

“We expect rental growth to be high in Townsville throughout 2024 due to the high demand for employees, with many companies likely to lease housing on behalf of employees so they can fill positions.”

According to Residential Tenancies Authority data for December 2023, the median price in Townsville is $430,000, while the median rent for a three-bedroom house is $450.

Does this regional property cycle differ from others?

The CBS Property Managing Director, George Kafantaris, said that the ever-dwindling housing supply and relative affordability are driving regional property markets and that often volatile price fluctuations may give way to steady capital gains.

According to the data, this time is different and price growth will continue to be strong well into 2025, unlike previous cycles of large ups and downs.

Compared to the main capital cities, which have stabilised, the current market is still relatively affordable.

Since the starting base price is lower, all dollar increases will result in a higher percentage increase than in areas with a higher starting price.

There’s no doubt that regional areas with multiple drawcards, such as employment, lifestyle, and improved infrastructure, will continue to attract strong net migration and pressure on property prices.”

“New housing supply simply cannot keep up with demand.”

According to CoreLogic Research Director Tim Lawless, the most successful regions are those with a diverse economic base, such as agriculture, tourism, ports and mining.

Property markets were not buoyant in all regions.

The largest quarterly drops were recorded in Launceston (-2.3%) and Devonport (-2.0%) in Tasmania. In 11 of Victoria, Tasmania and NSW regional markets, annual declines were recorded, with Batemans Bay (5.8 per cent) having the biggest annual decline.

In the past decade, values have increased by 91 percent in Tasmanian housing markets, Mr Lawless said.  

A combination of affordability constraints following the pandemic surge in values, negative interstate migration, and a normalisation of internal migration rates are likely to contribute to the softer conditions across regional Victoria and regional Tasmania.

Q&A on the article

What is the difference between regional and capital city property markets?

As a result of the Covid years of urban escapism, regional property prices are outpacing capital city prices. The reversal of fortunes between the cities and regions has largely been driven by double-digit annual growth in the migration magnets of Western Australia and Queensland.

What are the fastest-growing property markets in each region?

Coastal towns Albany and Bunbury in WA experienced the highest quarterly growth, with value growth of 7.7% and 6.2% respectively, ahead of Lismore (5.5%) in Northern NSW and Townville (4.7%) in Queensland.

What are the worst performing regional property markets?

The largest quarterly drops were recorded in Launceston (-2.3%) and Devonport (-2.0%) in Tasmania. In 11 of Victoria, Tasmania and NSW regional markets, annual declines were recorded, with Batemans Bay (5.8 per cent) having the biggest annual decline.

CoreLogic’s Hedonic Home Value Index ranked North Rothbury among the region’s top performers in 2022, which prompted investors to scramble to get a map of the town. Huntlee, the Hunter Valley’s newest masterplanned development, shares the same postcode with North Rothbury. 

Just north of the Pokolbin wine region, Huntlee’s impressive new town center welcomes you with open arms. Here you can find everything you need for shopping and personal needs, such as a daycare, medical center, Coles supermarket, tavern, and specialty shops. Huntlee Fitness will open its doors in just a few weeks.

Having the vineyards at your doorstep means that you have access to a few years’ worth of quality weekends within a very short drive of here. Huntlee is also well located for another very important reason. Singleton, Maitland and Cessnock are close by and provide a wealth of employment opportunities, ranging from engineering to hospitality to high-tech. As a result, Huntlee is becoming a popular place for working families to raise a family in a supportive, curated environment.

Numbers tell the story

When the masterplanned community is completed, it will have 7500 residents spread across four villages, the first town in the Hunter in 50 years. With 45 minutes between Newcastle and Sydney and an easy hop on the freeway, the area is seeing an increase in remote-working residents following the Covid revolution.

Considering its unmatched lifestyle and home prices well below the NSW median, the North Rothbury-Branxton-Greta region is expected to experience explosive growth in the upcoming years.

More than 60% of the current population of 8800 is expected to grow to 14,100 by 2041.

Hydrogen hub

Residents of Huntlee can afford a home that is out of reach in most major urban areas with an average block size ranging from 225sqm to 897sqm. A healthy 4.9 per cent rental yield is achieved in the Hunter, and there is just a 2.79 per cent rental vacancy rate. The Hunter is poised to become one of NSW’s first green hydrogen hubs, creating new low-carbon jobs.

The town center is also undergoing rapid development. Green Ridge, a luxury retirement village across the road, is being built. As the area approaches government-mandated population milestones, nearby land for primary and secondary schools is ready for development. A wide range of public and private secondary schools are also within minutes of Branxton and Greta primary schools.

Invested in prospering

Huntlee emphasizes self-sustaining communities that generate their own microeconomies by providing employment, education, entertainment, shopping, and community services.

The city of Huntlee is dotted with parks and walking paths, making it a social hub for families and friends. The Huntlee District Park is a jewel among the trees and is home to an amphitheatre, picnic areas, barbecue facilities, and dog park. 

With the development focus shifting to bringing even more vitality and diversity to the town centre by 2023, the shopping precinct will be within walking distance of modern residential and residential/commercial townhome developments. The Urban Series development offers super modern, open-plan designs––packing a lot of home into highly affordable land footprints.

According to Robert Crane, Huntlee’s sales director, the Urban Series will offer a new way of life for working and professional people and their families in the area. People of all ages can benefit from the lock and leave lifestyle, from young couples to executives to downsizers and retirees.

At the start of 2023, Huntlee’s residential community consisted of both owners and renters. The median house price was $826,000, and the median rent was $685 a week. A variety of block sizes are available in Huntlee’s latest release, ranging in size from 225sq m to 895sq m with a few larger lots available.

The Huntlee Display Village offers a stunning range of homes built by Australia’s leading builders, worth a visit just to get some inspiration for your own home. Investors will be interested in choosing design configurations that maximize rental and resale returns.

In addition to standard electricity, water and sewer connections, Huntlee provides a separate recycled water system for toilets and gardening, eliminating the necessity for bulky water tanks. In addition to this, there are natural gas and FTTP internet connections, fences at the side and rear, and landscaping on the front.

It takes significant investment and determination to masterplan a whole town, but the payoff is well worth it, as Huntlee properties homes outperform the broader housing market in terms of returns and resales. In a booming location, this property offers low vacancy and high yields.

The dream of owning a home in Newcastle or Lake Macquarie may feel increasingly out of reach for some young people, but there may be a solution – rentvesting. 

With increasing prices and interest rates increasing 143 times in little more than 15 months, rentvesting is fast gaining attention. 

Young people searching for new ways to get a foot in the property market may find this a viable method, says Niva Property’s Nigel Watts. 

“Simply put, rentvesting is all about renting where you want to live and investing in a property in a different and more affordable location,” he told the Newcastle Weekly. 

“Firstly, you get your foot in the property market as early as possible, and with a well-selected property you can start to build equity and wealth from a young age.   

“You can then use this equity in addition to your normal cash savings to help fund a future home when you are ready to settle down. 

“This also teaches people about investing and about finances – great life skills to have, and thirdly it means when you are young you can rent and not worry about doing all the maintenance – live your life before settling down in a family home.”   

Nigel says the typical price for a house in Newcastle has risen 38% in the past five years to $966,000. 

In Lake Macquarie, the rise is 43% to $935,000. 

With a 20% deposit often required, homebuyers typically need $200,000 saved in the current real estate climate. 

At a 6% interest rate, he adds, a home loan would attract a monthly repayment of $4,593 – 63% of the median household income in the Lake Macquarie and Newcastle region.   

 WHAT MAKES A GOOD PROPERTY FOR A RENTVESTER?  

“Buying in a more affordable location where prices are yet to increase, buying in a location with strong macros indicators showing positive capital growth prospects, and ensuring the suburb you buy in has low rental vacancy and good overall yields,” Nigel says will make for a good rentvesting property. 

“Most importantly you must plan to keep the property for the long haul,” he adds. 

“If you sell within the first five years you may not reap the rewards of your hard work.”  

Before you invest, he says, you must work out cash flow projections to ensure affordability. 

“An established property that can be improved is a good strategy as this means you know what you are getting and generally there is a lot less risk than off the plan. 

“This is especially so now with many builders going into liquidation and costs continuing to rise.   

“With an older established property, you also have an option to manufacture additional equity in years to come through carefully planned and managed renovations.       

“Don’t get something too run down though that needs a lot of work and can cost a lot in maintenance and repairs,” he warns.   

“Whilst houses tend to out-perform units based on historical data, if a unit is all you can afford, try to buy one in a small complex which generally has less strata issues, less costs and less hassles.” 

WHERE TO RENTVEST  

“That’s the million-dollar question,” says Nigel.   

“If you are not comfortable buying away from where you live, your options are of course reduced, however, it may still be possible for you to buy local and achieve your goals. This all comes down to where you live, affordability options and of course your borrowing capacity.   

“A key thing is to set realistic expectations and you may need to invest in an area you’d never thought of before.”  

Depending on your individual situation, Nigel also says young people could consider living in their rental property or rentvesting with a sibling or friend.