Australia’s real estate boom isn’t over, despite signs of decline across some capital city property markets.
This was according to Arjun Paliwal, founder and head of research at InvestorKit, following the release of the agency’s half-yearly white paper, which analysed Australia's housing fundamentals and property market pressure in the eight capital cities and 25 most populated regional cities.
Paliwal said that seeing the falling market in Australia’s two biggest cities, Sydney and Melbourne, which represent a large portion of the national real estate data, led many to think conditions are weak all around Australia.
“Australia’s property outlook is far from weak,” he said. “Despite the last two years of nationwide blanket capital growth being over, Australia’s outlook for housing is still strong, with 17 of 25 housing market fundamentals ranked as either strong or very strong. Our analysis was holistic in nature and tracked core fundamentals across people movement, economic activity, finances, affordability, supply, and confidence. Our outlook remains positive; however, one should not confuse a positive outlook for a market where everything continues to grow by more than 20% per year in almost every city … Any weakness we currently see is expected to be short-lived due to these remaining healthy housing fundamentals.”
InvestorKit revealed which highly populated property markets continue to perform well and have a positive outlook:
Greater Adelaide’s sales market was experiencing high pressure due to a 1.3% rise in quarterly asking sales prices for houses and a 4% drop in total listings over the last quarter. Monthly sales volumes were flattening, and vendor discounting rates have also bounced from the bottom.
Paliwal said rising house prices when there is minimal stock enables competition in the market, indicating the city will continue to see outperformance in comparison to its peers. This combined with the very high pressure in the Adelaide rental market, with vacancy rates at a 0.3% crisis level, the lowest in more than 15 years, means Adelaide will remain well insulated with this low supply.
Darwin’s house sales prices saw a 3.8% rise over the last quarter, while the number of sales listings rose 1.7% over the same period. Stable monthly sales volumes and vendor discounting rates both indicate high market pressure. Pressure in Darwin’s rental market is also very high, with vacancy rates falling to their lowest levels since 2012, at 0.4%, which led to a 15.4% growth in the median rental price in a year.
Townsville is experiencing high pressure in its sales market and extremely high pressure in its rental market. Quarterly house prices lifted 0.3% while total listings dropped 5.4% over the same period. Vacancy rates in Townsville are also at their lowest in more than 15 years, which has resulted in a 7.9% growth in median rent price in 12 months. Over the past decade, rents have also grown 11% higher than the area’s price growth. Rising interest rates are unlikely to make this market unaffordable due to its weak decade price growth average – growth can occur without stretching locals.
Toowoomba house prices have increased 3.6% over the past quarter – annualised, that’s a double-digit growth. Sale listings, meanwhile, fell 2.6% over the same period. Toowoomba is experiencing high market pressure in its sales market, and extremely high pressure in its rental market. Due to vacancy rates being at crisis levels, rental prices have risen 11.1% in 12 months and 36% over the past decade.
“Toowoomba is firing on all cylinders,” Paliwal said. “It has low supply, high annualised price growth, low vacancy and a strong pipeline of jobs and economic activity in a city offering an affordable lifestyle.”
Ormeau-Oxenford is experiencing high pressure in the sales market, with quarterly house sales prices rising 10.5% over the last quarter and total listings increasing 4.6% over the same period. The region’s rental market is also seeing very high market pressure, with vacancy rates around an extremely low level of 0.3%, the lowest in more than 15 years. This, in turn, resulted in a 23.4% growth in the median rent in a year. Over the last decade, house rents in the region rose 45%.
Rockhampton is experiencing high pressure in the sales market, with quarterly house prices increasing 7.9% while total listings have dropped by 2.1% in the same period. The monthly sales volumes are also starting to decline, while vendor discounting rates are slightly increasing. Rockhampton’s rental market pressure is also very high, with vacancy rates at a crisis level of 0.3%, the lowest since the end of the mining boom. Due to this, the median rental price has increased by 10.5%, and 14% over the last decade.
Bunbury, south of Perth, is experiencing high sales market pressure, with house prices rising 4.4% over the last quarter and total listings declining by 2.2%. The rental market pressure is also very high. Vacancy rates are recovering from the historic low last year, but still sitting at 0.4%. This has led to a 16.7% growth in the median rental price in a year, and 20% over the last decade.
Bundaberg’s house prices have increased by an extremely strong level of 10.9% over the last quarter. Total for sale listings have risen by 1.5%. Despite this, market pressure in the region remains high and total supply is well below pre-pandemic levels. Bundaberg’s rental market is also experiencing very high pressure, with the median rent price rising 14.3% over the last 12 months and 40% over the decade. This can lead to a high rental yield of 5.4% with strong growth expected to continue.
Shepparton is experiencing a healthy level of sales market pressure and very high rental market pressure, despite a 1.2% drop in quarterly house prices. Total listings also fell 8.9% over the last quarter, creating a price floor. The region is also seeing very high rental market pressure, with vacancy rates at the lowest levels in more than 15 years, at 0.3%. This has resulted in an 8.8% rise in median rental prices over the past year and 42%in the last decade.
Tasmania’s Launceston has high sales market pressure, resulting in a 0.8% rise in house prices over the past quarter and 16% decline in total sales listings. Its rental market pressure is also high, but vacancy rates aren’t as low as some property markets. Due to the 1% vacancy rate, median rents have risen 18.4% within a year and 64% over the last decade.
