Property Market Dynamics: A Resilient 2024
The Australian property market has demonstrated remarkable resilience in 2024, overcoming significant headwinds such as high interest rates, limited supply, and cost-of-living pressures.
According to PropTrack, national home values surged by 50% between March 2020 and December 2024. This growth has been particularly strong in affordable regions, with Brisbane, Adelaide, and Perth recording price increases of almost 80% in a short 4-year period.
CoreLogic estimates approximately 43,232 property sales occurred in October, bringing the annual total to 522,401, a slight decrease from 524,999 in the previous year. The median time on market increased to 33 days in the three months to October, up from 27 days the previous year, indicating a shift towards a more balanced market. Vendor discounting rates averaged -3.6% nationally over the October quarter, suggesting sellers are making modest price concessions to facilitate transactions.
Despite rising interest rates, the Australian property market has remained robust, with national dwelling values approaching $11 trillion by the end of 2024, according to the ABS data.
Recent research by CoreLogic shows that 29.3% of Australian suburbs now boast median property values exceeding $1 million, comprising 1,257 suburbs for houses and 140 for units out of 4,772 nationwide.
- Sydney continues to dominate the luxury market, representing nearly 40% of all million-dollar suburbs and adding 46 new entries in the 12 months to August 2024.
- Brisbane has emerged as a rising star, contributing 46 new million-dollar suburbs.
- Perth recorded 36 new additions, while Adelaide, with only 30% of Sydney’s population, added 29 suburbs, highlighting the strong performance of the market.
Rental Market Trends
National rental values rose by 8.5% over the past year, significantly outpacing long-term trends. As property prices outpaced rent increases, rental yields declined in major cities such as Sydney and Melbourne, reaching yields, at 2.7% and 3.2%, respectively.
At the same time, housing shortage and surging population pushed vacancy rates to critically low levels at 1%-2%, which is much lower than the healthy market conditions at 3%. This suggests that the tight rental market will continue to dominate in 2025, amid high population growth and below long-term trend housing supply.
As of December 2024, vacancy rates are as follows:
- Adelaide: 5%
- Perth: 0.7%
- Brisbane: 1.0%
- Sydney: 1.5%
- Melbourne: 1.7%
- Canberra: 1.7%
- Hobart: 0.6%
High Housing Demand
A key factor underpinning high price growth has been the rapid rise in population, largely fueled by overseas migration. In 2023 – 24, net overseas migration contributed an additional 518,000 people to Australia’s population, the highest on record.
The national population is projected to continue at high growth rates at 1.5%-2% per year, adding 1.5 million people every 3 years until the end of the 2020s. The national population is on track to reach 35 million by 2050, and 70 million by the end of this century.
Housing shortage has been a critical issue for many years in major metropolitan areas across the country. It is estimated that 250,000 dwellings must be built every year to meet the demand, while only 170,000 dwellings were built per year recently, leaving 50,000 shortages in 2023-24 alone.
Supply Constraints
A significant trend observed since 2020 has been the persistent decline in the number of property listings in many capital cities, with total listings dropping from approximately 300,000 listings before 2020 to around 230,000 since 2021, representing a 23% decrease.
While Sydney and Melbourne have maintained similar listing levels before and after 2020, with 30,000 listings in Sydney and 40,000 in Melbourne, other mid-sized cities have experienced notable declines. Brisbane’s listings fell from 30,000 to 18,000, a 40% drop; Adelaide saw a reduction from 16,000 to 8,000, down 50%; and Perth’s listings decreased from 27,000 to 13,000, a decline of 52%.
This trend highlights ongoing challenges in housing supply in Brisbane, Adelaide, and Perth, which are reflected in low vacancy rates and surging sale and rental prices over the past three years.
The chart below highlights the chronic undersupply of housing in Brisbane, where the annual shortfall has reached up to 20,000 units over the past 15 years. This deficit has accumulated over time, resulting in a total estimated shortfall of 200,000 units in the city as of 2024.
Housing Shortfall (Demand vs Supply) – Brisbane 1980 -2024
Market Outlook
The Australian property market remains resilient despite households’ budget challenges. With population growth expected to continue and supply constraints drag on, housing demand is likely to remain elevated over the tight supply conditions.
The disparity in growth rates across capital cities is largely attributed to affordability. While household incomes remain broadly consistent nationwide, property prices in Brisbane, Adelaide, and Perth are approximately 50% lower than in Sydney. This affordability gap has attracted both local and interstate investors seeking high yield and capital growth that drive the demand in the affordable markets.
To this end, affordable cities such as Brisbane, Adelaide, and Perth are predicted to continue the path of sustained growth, while high-price markets may face softer growth amid affordability issues.