Top property markets: Where’s the action?

Exploring property investment trends

Top property markets: Where’s the action?


By Mina Martin

Over the past year, Queensland, Western Australia, and New South Wales have solidified their positions as the leading property markets for investors, capturing the attention of three-quarters of survey respondents in the Australian Property Investor’s (API) Property Sentiment Report for Q1 2024.

These three states have eclipsed other regions, with a particularly notable shift in Western Australia, which has seen its popularity among investors double from 12% to 25% in just 12 months.

Brisbane’s property market continues to thrive, with the median house price surpassing $900,000 for the first time after 15 months of consecutive growth.

This growth is further complemented by the strong performance of regional Queensland, where interstate migration is pushing up competition and driving reliable returns, particularly for unit values, which are outperforming the national average by three to four times.

“The 75% figure for the top three combined exceeds the 58% of respondents who say they have investment properties in those markets and the 68% who live in those cities, suggesting a strong interest in interstate investment,” the report said.

Interest rates and investment strategies

Despite ongoing concerns about high interest rates, the proportion of investors prioritising the acquisition of new properties has increased significantly, the API report found.

The first quarter of 2024 saw a surge in the number of respondents aiming to enhance their rental returns, nearly doubling in just three months to 7%. This shift is occurring in a context where rental price growth shows little sign of slowing, influenced by a national rental crisis and escalating property values.

“In this climate of rising property prices and high investor activity, the number of people focused on reducing debt is declining in proportion to the amount looking to buy an investment property,” the report said. “Spending rather than saving is the focus.”

Positioning for retirement continues as a key focus among respondents, slightly decreasing this quarter to 18% from 19%, but still significantly higher than a year ago when it was under 5%, and six months ago at 12%.

Market resilience amid rate uncertainties

The API survey revealed that while interest rates are a crucial concern – potentially influencing over half of the buying (54.5%) and selling (51.7%) decisions – investors are showing a degree of resilience.

This resilience is showcased by the stable yet cautious approach to property investment, despite the Reserve Bank’s indications that inflation may not align with their targets until late 2025.

The percentage of respondents indicating that interest rates influenced their decision to buy jumped from 29% to 36% in just three months. Similarly, for sellers, the figure rose significantly from 11% to 15%.

Shifting preferences: Houses vs. units

Investment preferences among Australians have seen significant shifts; detached houses have regained popularity over units, despite the strong performance of the latter in recent months.

By the end of Q4 2023, 45% of respondents favored houses over units, though this preference slightly adjusted to 39% by Q1 2024, reflecting ongoing capital gains in the unit market.

Regional markets gaining ground

While capital city markets have traditionally led in performance, regional markets have shown stronger growth rates in the recent quarter, challenging the long-standing dominance of urban centers.

This trend suggests a growing investor confidence in the potential of regional property markets alongside the steadfast capital city markets, API reported.

Download the API report for more in-depth survey insights.

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