Property Price Growth, Past and Future Decade
Weekly Real Estate Market Update with Leigh Martinuzzi MPG
January witnessed another upswing in property prices across Australia, with certain capital cities outperforming others. CoreLogic reports a 0.4% growth in dwelling prices throughout the month. Standout performers include Adelaide, Perth, and Brisbane. Since the rise in housing prices last year, unit prices have surged by 6.9%, while housing prices have seen an 11% increase. Regional areas, particularly in Queensland, South Australia, and Western Australia, are outpacing capital cities, attributed to greater affordability. Regional areas have experienced a 1.2% growth over the last quarter, compared to just 1% in capital cities. However, flattening conditions in Melbourne and Sydney also contribute to this result. With 115,241 reported sales over the last three months, an 11.9% increase from last year, the housing market in Australia continues to defy odds despite higher interest rates, rising living costs, and property unaffordability.
In the latest ANZ-Roy Morgan Consumer Confidence report, there was a notable 1.9-point decline, bringing the index to 82.5, the lowest in 2024. The drop follows the Albanese Government’s decision to break an election promise and alter Stage 3 tax cuts, contributing to a record 52 consecutive weeks of Consumer Confidence below 85. While confidence in New South Wales, Queensland, Western Australia, and South Australia decreased, Victoria saw an increase.
The assessment of current financial conditions indicates a decrease, with 19% claiming improvement compared to last year, while 50% feel their families are worse off. Looking ahead, 34% expect better financial conditions in the future, and short-term economic confidence is pessimistic, with only 9% anticipating ‘good times.’ The report also highlights a decline in buying intentions for major household items. ANZ Senior Economist Adelaide Timbrell suggests that despite the recent drop, the four-week moving average rose. With the RBA’s decision to hold the current cash rate at 4.35%, consumer confidence, especially among indebted homeowners, is expected to improve.
In terms of improving confidence in the property market, Matusik offers insights into the Australian real estate market’s performance. Notably, there has been a 67.5% increase in dwelling values over the past decade. In 2023, values rose by 8.1%, with Perth leading among major urban areas. Predictions for the next decade suggest a consensus of a 66% increase, reaching a median value of $1.26 million by 2033. Despite a standout 24.5% growth in 2021 due to COVID-19 factors, Matusik predicts a 5% annual growth in 2024 and 2025, driven by steady demand and reduced supply. The average trend in Australia is property prices rise by about 5 to 7% per year, with moments of downturn or softer markets. Sellers can expect favourable outcomes, and buyers may see their equity grow by 5% in the next 12 months. A potential decrease in interest rates later this year could boost buyer activity, creating a more competitive market.
