Weekly Market Update (28 March 2024)

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Weekly Market Update (28 March 2024)
  1. Price Square Metre (Source: Domain)

    Domain’s latest data shows that house and unit prices per square metre in Australian capital cities have been trending upwards due to higher prices and smaller floor/land sizes. Embracing higher density living can enhance affordability by increasing housing stocks and providing more opportunities for homeownership. Shrinking land sizes attributed to densification and rising land premiums actually create more opportunities for home ownership and are essential for preserving and improving housing affordability.

 

  1. National Median Home Price (Source: SPI)

    The national median home price in Australia has surged by 8.9% since last February to reach a record high, driven by a shortage in housing supply and strong demand. Most housing markets experienced price rises, with the strongest growth in Queensland, South Australia, and Western Australia. However, Hobart saw a decline due to factors like migration and affordability. Sydney and Melbourne experienced widespread price increases, but the growth trend is becoming more diverse across the country.

 

  1. Cash Purchases Report (Source: PEXA)

    The report by PEXA reveals that over a quarter of residential properties in Australia’s major eastern states were purchased entirely with cash in 2023, totaling $129.6 billion. Cash purchases are dominated by two groups—regional and inner-city urban buyers. Regional buyers, likely retirees and downsizers, seek lifestyle changes, while urban buyers include affluent owner-occupiers and investors. Despite rising interest rates, cash buyers remain resilient, potentially exacerbating the intergenerational wealth divide. The demographic profile of cash buyers differs from mortgage buyers, with cash buyers tending to be older and asset-rich. NSW recorded the highest aggregate value of cash purchases in 2023, followed by QLD and Victoria. The growing cash-buyer market is driven by regional and inner-city urban buyers, with regional areas experiencing high proportions of cash purchases. Urban areas command higher prices, with specific postcodes recording significant cash purchases. While property investment trends and hotspots are of interest, the focus should be on investment-grade properties in A-grade locations for long-term growth.

 

  1. Australia’s Housing Market (Source: CoreLogic)

    Australia’s housing market has experienced broad-based capital gains over the past year, driven by strong demand and housing supply imbalance. Brisbane, Adelaide, and Perth have seen widespread value uplift in both houses and units, with most suburbs recording double-digit value growth. Rental growth has shifted towards capital city houses, with Perth being the best-performing capital for annual rental growth, while Hobart has seen declines in both house and unit rents.

 

  1. Housing Market Trends (Source: Leanne Jopson)

    The housing market has seen a shift from the pandemic-driven demand for larger homes to a growing preference for smaller, more compact living spaces, particularly in the rental market. Units are now being leased faster than houses, indicating a renaissance of unit living. There has been a significant increase in searches for units, and the pricing gap between houses and units has narrowed, reflecting a renewed appreciation for the practicality and affordability of unit living. The reopening of offices and the appeal of living close to city centers have contributed to this trend. The market is dynamic, and the future may see further intensification of the appeal of units, but shared housing may also regain interest due to the ongoing cost of living crisis.

 

  1. Pain & Gain Report (Source: CoreLogic)

    The Australian property market has shown resilience, with the latest CoreLogic report indicating an increase in profit-making sales and transaction numbers in the December quarter of 2023. Around 94% of transactions recorded a gain, with a median gross profit of $310,000. The report also highlighted a decrease in loss-making sales and a slight easing in short-term resale conditions. Regional markets outperformed capital cities in profitability, with Adelaide being the most profitable capital city market. Houses continued to deliver higher profit-making sales compared to units, and the total nominal profit from resales in the December quarter increased to $29.9 billion.

 

  1. Apartment Vacancy and Rent Outlook (Source: CBRE)

    The forecast from CBRE’s Apartment Vacancy and Rent Outlook predicts a 28% increase in apartment rents across 53 precincts in Australia’s major capital cities by 2028. The median rent for a two-bedroom apartment is projected to rise by $155 per week between 2024-2028. The report also highlights a 9% reduction in potential apartment supply, leading to tight vacancy rates. Despite the rent increases, renting is expected to remain more affordable than purchasing in most Australian cities.

 

  1. Housing Affordability (Source: REIA)

    The housing affordability crisis in Australia is worsening, with the average household spending nearly 48% of their income on mortgage repayments. The latest report shows a significant decline in affordability, particularly in states like NSW, Victoria, and Queensland. Rental affordability is also suffering, except in NSW and the ACT. However, there has been a surge in first-home buyer activity, possibly in response to the rental conditions.

 

  1. CoreLogic Auction Results (Week ending 24 Mar 2024)
    (Total Auction / Clearance Rate)

    – Sydney: 1,199 / 70.4%

    – Melbourne: 1,760 / 63.1%

    – Brisbane: 248 / 63.2%

    – Perth: 14 / 50%

    – Canberra: 104 / 63.5%

    – Adelaide: 193 / 69.3%

    – Tasmania: 1 / 0%

    – Combined Capitals: 3,519 / 65.8%

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