Property overview - February 2024

Highlights

• Perth and Brisbane set to lead growth in 2024

• Apartment blocks to see renewed demand in 2024

• Sydney house prices doubled in 10 years

• Rents have now passed $600 per week

Perth and Brisbane set to lead growth in 2024

Property prices are expected to continue growing, with the smaller capital cities of Perth and Brisbane expected to be the top performers over the next 12 months, according to a new report.

Oxford Economics predicts that property prices in Perth will increase 9.1 per cent this year, making it the nation's strongest property market. Over the next three years, they also predict Perth house prices to increase by 29 per cent and units by 34.4 per cent.

Senior Economist at Oxford Economics Australia, Maree Kilroy, expects Perth to continue its recovery after years of price declines. “Perth has underperformed for years, even as the other capitals were rebounding sharply, so it has so much to catch up on to maintain that relativity with those other capital cities,” Ms Kilroy said.

“Perth has a significant stock deficiency and WA has the greatest supply chain and capacity constraints of all states,” Ms Kilroy said. “It has the strongest population growth, which we expect it to maintain over the next three years.”

Oxford Economics also predicts that Brisbane will see values rise 4 per cent, followed by Sydney at 2.6 per cent, Adelaide at 1.4 per cent and Melbourne at 0.9 per cent. Overall, the capital cities are predicted to increase in value by 2.7 per cent in 2024.

Ms Kilroy said the return of interest rate cuts from late 2024 should facilitate even stronger price growth over the next two years in Brisbane. “Demand fundamentals are expected to remain strong, with Queensland positioned at the front of the pack in terms of population growth,” she said.

“Adding to this, the 2032 Olympics should provide a sustained boost to developer and buyer optimism from mid-decade.” Over the next three years, Brisbane house prices are expected to climb by 19.8 per cent and units by 23.3 per cent, she said.

She said Sydney house prices will increase by about 16 per cent over the next three years, while units are expected to climb by more than 23 per cent over the same period as buyers seek cheaper housing options.

“With the context of a growing dwelling stock deficiency, the return of interest rate cuts will drive the next acceleration of price growth from late-2024 onwards,” she said. “However, the pace of growth is slowing as a result of the additional interest rate lift in November and rising total listing volumes, so this year would be softer in terms of price growth.”

Apartment blocks to see renewed demand in 2024

Apartment rents are rising in New South Wales – meaning apartment blocks are becoming more attractive to investors, according to CBRE.

CBRE agent Paul Grasso said he thinks apartment blocks and commercial property will be popular in 2024.

“This is the year of beds and sheds,” Mr Grasso said.

“With the consistent increasing of rents through the metropolitan Sydney market, we expect these blocks to be a hot ticket for the market.

SQM Research found that there was 16 per cent growth in unit rents over the past year, compared with 13.7 per cent for houses. 

CBRE said this aggressive growth is expected to continue due to the housing shortage and apartment blocks present the perfect asset to capitalise on this trend.

Sydney house prices doubled in 10 years

The East Coast has led the Australian property market over the past 10 years with Sydney being the standout performer.

The Harbour City has seen house prices increase 107.1 per cent in 10 years according to CoreLogic, making it the best-performed market in the nation.

House prices in Melbourne (81.5 per cent), Brisbane (86.9 per cent), Adelaide (81.5 per cent), Hobart (85.5 per cent) and Canberra (81 per cent) also saw strong gains during the same period.

Meanwhile, Perth increased by just 35 per cent and Darwin fell by 0.4 per cent. 

Nationally, median house prices increased by 85.3 per cent to $816,599 over the past 10 years.

Rents have now passed $600 per week

In good news for property investors, national rents have hit a new record high, passing $600 per week.

According to CoreLogic, rents are up 8.1 per cent nationally to $601 per week over the past 12 months.

Rents have increased the most in Perth, up 13.4 per cent over the past 12 months, followed by Melbourne at 11.1 per cent, Sydney at 10.2 per cent, Brisbane at 8.2 per cent and Adelaide at 7.7 per cent.

Median rents across the capital city markets ranged from $745 per week in Sydney, to $535 per week in Hobart. 

Canberra and Hobart were the only markets to see a decline in rent values through 2023, falling -1.9 per cent and -3.5 per cent.