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Property investment market overview


Residential markets across Australia continue to adapt to the dynamic economic and property market environment.

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  • Finance
  • Read Time: 6 mins

Australia’s economy continues to decelerate due to higher interest rates, persistent inflation, slower-than-expected wages growth, and ongoing global economic uncertainty. 

Economic growth decelerated in the March quarter, with GDP increasing by 0.1%, down from an upwardly revised 0.3% in the previous quarter. The economic outlook remains uncertain, and recent data suggest that bringing inflation back to target is likely to be a challenging process. Following interest rate hikes throughout 2022 and 2023, there have been no further increases this year. The official cash rate remains at 4.35%, slightly above the 34-year average of 3.86%. 

With inflation staying above the Reserve Bank of Australia’s (RBA) 2 to 3% target since late 2021 and the unemployment rate easing to 4%, a rate cut seems improbable until at least early 2025. 

Affordability and serviceability constraints continue to challenge many buyers. More affordable markets like Adelaide and Southeast Queensland are witnessing increasing purchaser demand. This demand is not only fuelled by local residents but also by high levels of overseas migration. 

Variations in stock levels help explain the diverse capital growth performance across Australia’s capital cities and regions. 

Areas with higher-than-average stock, such as Victoria and Tasmania, tend to have an oversupply of housing relative to demand, exerting downward pressure on prices. Conversely, lower supply levels in Brisbane, Adelaide, and Perth continue to drive robust growth. 

In the longer term, affordability might once again become an attractive factor in cities where price growth has been more subdued in recent years, particularly as the value gap between cities narrows. This could help stabilise capital growth trends in cities like Melbourne, Hobart, and Canberra, while potentially slowing the capital growth rate in Brisbane, Adelaide and Perth.

Why must the Melbourne market improve?


Melbourne’s median dwelling values have risen 11.2% since the onset of Covid but are still -4.0% below their peak of March 2022. 

Earlier this year, Brisbane dwelling values surpassed the median values in Melbourne. Before the pandemic, Melbourne's median dwelling values were 37% higher than Brisbane's. However, since the onset of Covid, Brisbane's values have grown at over five times the rate of Melbourne's, with an increase of 59.8%. 

The Melbourne housing market has not performed as strongly as some other capitals over the past year or two. Melbourne’s recovery is lagging Sydney and Brisbane, where prices fully recovered from 2022 falls last year. 

Median dwelling values for Sydney, Brisbane, Adelaide, and Perth may be reaching their peaks in the current cycles. This creates a window of opportunity as Melbourne property values have significant upside potential.

Median value growth since the
onset of COVID to May 2024
Change from series peak to May 2024 Series Peak date
% $
Sydney 27.2% $247,174 0.0% Jan-22
Melbourne 11.2% $78,555 -4.0% Mar-22
Brisbane 59.8% $315,553 <at peak> May-24
Adelaide 61.0% $286,865 <at peak> May-24
Perth 62.6% $283,687 <at peak> May-24
Hobart 28.4% $144,723 -11.5% Mar-22
Darwin 26.2% $104,242 -5.3% May-14
Canberra 31.8% $202,542 -5.8%May-22

Source: https://rmbl.com.au/blog/property-investment-market-overview

Victoria experienced the biggest population increase over the year to December 2023 as per the latest data from the Australian Bureau of Statistics (ABS). 


Population at 31 December 2023
('000)
Change over previous year
('000)
Change over previous year
(%)
New South Wales 8434.8 185.5 2.2
Victoria 6906.0 186.5 2.8
Queensland 5528.3 141.4 2.6
South
Australia
1866.3 30.2 1.6
Western Australia 2927.9 93.8 3.3
Tasmania 574.7 2.4 0.4
Northern Territory 253.6 2.4 0.9
Australian Capital
Territory
470.2 9.1 2.0
Australia (a) 26966.8 651.2 2.5

Source: https://rmbl.com.au/blog/property-investment-market-overview

The Victorian government plans to increase Melbourne’s population by 2050 to 8 million people, which will put Victoria’s population at around 10 million people. Therefore, over the next 30 years, Melbourne is likely to require in excess of 1.6 million more dwellings. 

Strong population growth is forecast to tighten supply and will continue to push property prices upwards as we move through this next stage of the property cycle. 

RMBL prioritises supporting existing borrowers while keeping a close watch on emerging trends and themes as the current economic and monetary cycle stabilises.

Disclaimer


This article and any links provided are for general information only and should not be taken as constituting professional advice. National Seniors is not a financial advisor. You should consider seeking independent legal, financial, taxation or other advice to check how any information provided relates to your unique circumstances.

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