Economic challenges and shifting buyer behaviour are shaping the diverse landscape
Australia’s real estate markets are exhibiting distinct recovery patterns amid economic uncertainty, according to a new report from real estate firm PRD.
The report showed that while some areas have seen price rebounds – thanks to a stable cash rate since November 2023, economic headwinds and the ongoing cost-of-living crisis have tempered buyer enthusiasm.
Diaswati Mardiasmo (pictured above left), chief economist at PRD, noted that despite a shared economic backdrop of stable cash rates, rising inflation, and stagnant wage growth, the interplay between buyer demand and housing supply varies across regions.
“Although there is a similar baseline throughout Australia, the balance between the ‘stickiness’ of buyers and housing supply in each market is very different,” she said. “The overall trend might look the same, however, a closer look reveals multiple speeds.”
PRD’s Australian Economic and Property Report 2024, titled “Different Market. Different Gears,” highlights the diverse pace and direction of market movements across the country. The report indicates that while some local markets are seeing price growth, others are experiencing declines, regardless of whether they are in capital cities or regional areas.
“At present, there are many moving pieces in the economy, evident in the variety of red, yellow, and green ‘health of the market indicators’ throughout this report,” Mardiasmo said. “For once, there is no one dominant colour.”
Todd Hadley (pictured above right), managing director at PRD, emphasised the rapid shifts in market conditions in the first half of 2024.
“Many went into 2024 expecting a cash rate cut towards the end of the year,” he said. “Now, we are expecting a cash rate hike, with a potential cut in mid-2025. This could play havoc with property plans.”
Across greater capital cities, markets are recovering at different speeds. Greater Brisbane recorded a 17% growth in the 12 months to June 2024, surpassing Greater Melbourne’s 14.6% increase.
Regional markets are also experiencing varied dynamics. Regional Western Australia saw a 12.7% rise in median house prices over the same period, while regional Victoria and Tasmania posted declines of -5.1% and -7.7%, respectively.
National vacancy rates remained stable at 1.7% in June 2024 compared to the previous year, marking the first period of stability since the post-COVID era.
Meanwhile, the Time to Buy a Dwelling Index revealed a declining trend across most states, with Tasmania recording the highest index reading of 109.6 points in June 2024, the highest since December 2021. Additionally, investor finance has climbed to 37% since March 2024, exceeding pre-COVID levels, which averaged 29.0% in 2019.
“The question we mostly receive is, how many more months before something else (i.e. a cash rate hike) happens?” Mardiasmo said. “For now, it looks like all we can do is hold tight and make the best financial decision for your own needs, as we ride the different gears of each property market.”
According to Hadley, the property market is undoubtedly still experiencing similar issues to what Australians faced in 2023.
“These challenges will persist for the next few years, as we look for innovative solutions,” he said. “The good news is housing and cost-of-living was forefront in the Federal Budget 2024, as well as in the state-level budgets, and there are multiple initiatives to tackle the issues.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
