A desire for the quintessential Australian lifestyle is propelling a remarkable surge in house and apartment prices across the nation. The combined capitals are witnessing a historic climb in prices, setting new records. Behind the scenes, astute agents are discerning pivotal demographic trends steering the markets to unprecedented heights.
Melbourne's International Allure:
Even in Melbourne, still in the early stages of price recovery, a notable influx of international buyers seeking the perfect Australian lifestyle has contributed to annual unit gains reaching a two-year high. The latest Domain House Price Report for the last quarter of 2023 indicates a substantial 4% increase in unit prices over the year. While house prices experienced a more modest 0.9% rise in the quarter, it still represents the sharpest lift in two years. International buyers, including expats returning from various countries, are drawn to inner-city areas for their excellent schools, vibrant restaurants, and cafes. Renovated houses are particularly favored, reflecting a preference for turnkey living amid high renovation costs.
Sydney's Cashed-Up Downsizers:
In Sydney, particularly in lifestyle-centric areas like the eastern suburbs, inner city, inner west, and lower north shore, house prices have reached record highs with a 2% jump in the quarter. Cashed-up downsizers seeking areas with abundant lifestyle amenities are driving demand. Younger demographics, grappling with a rental crisis, are receiving support from parents keen on assisting them in entering the property market. The scarcity of rental options is prompting parents to aid their children in securing homes rather than moving back home. The market is witnessing an influx of old rentals transitioning to the sales market, as landlords capitalize on the demand, while investors remain cautious.
Supply and Demand Dynamics:
The common thread across major Australian cities is the persisting challenge of limited housing supply. Strong demand, coupled with a delayed increase in available stock, continues to exert upward pressure on prices. While there's a gradual increase in new listings, the supply in certain categories remains below expectations. Buyers, spanning various demographics, are seeking properties based on lifestyle considerations, proximity to schools, hospitals, restaurants, and city access.
Brisbane's Rising Demand:
Brisbane's property market is also experiencing a surge, with house prices reaching new highs after a 3.7% quarterly rise, while apartments saw a 3.9% increase. Interstate migration, constituting approximately 25% of the market, is a notable trend. Demand is strong, and supply remains constrained, leading to record prices. The appeal lies in areas offering a quality lifestyle, robust infrastructure, excellent schools, and diverse dining options. Returning expats and heightened overseas interest ahead of the 2032 Olympics contribute to the increased buyer numbers.
Canberra's Strong Unit Performance:
In Canberra, new unit price records are being set with a 3.5% price rise in the quarter, while house prices experienced a similar-sized drop. Units, particularly at entry levels, are performing robustly, competing effectively with rental prices. Buyers are enticed by the prospect of homeownership given the favorable price dynamics. House buyers, however, exhibit a wait-and-see approach, anticipating the impact of potential interest rate changes.
Conclusion:
The Australian property market is riding high on lifestyle trends, international interest, and a persistent imbalance between supply and demand. As buyers seek not just homes but an enhanced way of life, the market dynamics continue to evolve, presenting both challenges and opportunities. Whether it's the allure of Melbourne's cultural charm, Sydney's vibrant lifestyle, Brisbane's rising prominence, or Canberra's unit performance, the Australian property landscape remains dynamic and resilient. Investors and homebuyers alike are navigating these trends as they shape the future of real estate Down Under.
Reference: The factors driving price increases PROPERTY TRENDS - Sue Williams