Thrive in 2024: Essential Australian Property Market Update

June 18, 2024

Regarding the Australian property market update in 2024, the Reserve Bank of Australia (RBA) announced its decision at the June Meeting, to maintain the RBA cash rate at 4.35%, reflecting its assessment of the current economic conditions. 

The cash rate will continue to influence borrowing costs and consumer spending. Keeping the rate unchanged suggests the RBA aims to support economic growth while monitoring inflation and employment trends. 

This stability can provide confidence to property investors and homebuyers regarding mortgage rates and long-term financial planning.

Australian Property Market: Inflation on par with December figures

Inflation has significantly declined from its peak in 2022, largely due to higher interest rates helping to balance supply and demand. However, the recent data shows that the rate of decline has decelerated, and inflation remains above the 2–3 per cent target range. 

As of April, the monthly CPI indicator increased by 3.6 per cent year-on-year, reflecting a similar pace to December 2023.

Broader economic data indicates ongoing excess demand in the economy and elevated domestic cost pressures (cost of living).

Recent federal budget announcements could have an impact on demand, with State and Federal Energy rebates potentially reducing inflation for a temporary period.

Regional Variations in Housing Market Conditions

Analysts estimate that the Australian property market will rebound in the latter half of 2024, as Australia’s housing market is already experiencing growth across different regions. 

Perth is leading the pack as dwelling values have surged by 62.6% over the past 12 months, closely followed by Adelaide at 61% and Brisbane at 59.8% at top 3.

Australian Property Market Update 2024 - A Chart of Regional Variations in Housing Market Conditions in Australia

Property Market Update: Supply Constraints

The national housing market continues to face a significant undersupply, estimated at 120,000 dwellings, projected to increase to around 180,000 due to robust population growth and reduced construction activity.

The ongoing lack in the supply of housing for both renting and owning will continue to fuel an increase in prices and rent, despite higher interest rates and surging costs of living, says AMP chief economist, Shane Oliver.

Oliver says, “The undersupply problem will remain in place and that will help protect prices from falling deeper and ultimately help drive the next cyclical rebound.”

“It’s quite possible the trigger for the next boom will be the RBA moving to cut interest rates sometime later this year and that fundamental underpinning will remain the undersupply of property.”

Auction Clearance Rates Decline

The preliminary auction clearance rate across Australia’s combined capital cities has dropped to 67.3%, the lowest point in 2024. This property market decline is due to the King’s Birthday long weekend, which reduced auction volumes to 1,281, the lowest since Easter. Sydney and Melbourne experienced significant drops, while Adelaide maintained higher clearance rates. 

Auction volumes are expected to rebound in the coming weeks.

Australian Property Market Update 2024 - A Property Market Auction Chart

Queensland: A Promising Investment Opportunity

Queensland’s property market stands out as a promising investment opportunity. The state is benefitting from strong interstate migration, driven by lifestyle factors and relative affordability. 

Brisbane, in particular, has shown resilience with steady growth in dwelling values, up 15.1% in the last 12 months. Investors can enjoy not only capital growth but vacancy rates of just 1% and consistent 5% rental yields.

The Gold Coast and Sunshine Coast are also attractive for investors due to ongoing infrastructure developments and high demand for coastal properties. 

Implications for Property Buyers

For prospective buyers, the varied market conditions and declining auction clearance rates present both opportunities and challenges. 

In Perth, rapid price increases may make it challenging to find affordable options, while the slowdown in Hobart might offer more negotiating power. 

The drop in clearance rates suggests a cooling market, potentially easing competition and leading to better deals for buyers. However, the anticipated rebound in auction volumes could revive competition.

What should you do now?

The RBA’s decision to keep the cash rate at 4.35% indicates a cautious approach to balancing economic growth and inflation control, providing stability for property investors and homebuyers. Although inflation has declined from its 2022 peak, it remains above the target range, with recent data showing a slower rate of decrease.

Regional housing markets show varied trends, with Perth experiencing significant growth, while Hobart sees declines. The national housing market faces a notable undersupply, likely to drive up prices and rents despite higher interest rates. Auction clearance rates have dipped, but a rebound is expected.

Queensland stands out as a promising investment opportunity due to strong interstate migration and robust growth in areas like Brisbane. 

Overall, the Australian property market is poised for a potential rebound later in 2024, shaped by regional disparities and economic factors. The anticipated interest rate cuts could further influence market dynamics, creating opportunities for both buyers and investors.

However, as they say, the best time to buy property was 20 years ago. The next best time to buy property is today. St Trinity is here to guide you on your property journey and help you to discover the right property to achieve your financial goals for the future.

Contact us and let’s start the journey together.

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