Why Australia’s Property Market Could Surprise You This Christmas Season
Weekly Real Estate Market Update with Leigh Martinuzzi MPG
Australia’s property market remains a topic of keen interest as we approach the final months of 2024. This week, insights from the Reserve Bank of Australia’s (RBA) latest meeting minutes and an in-depth market analysis shed light on the delicate balancing act between housing affordability, interest rates, and market dynamics.
The RBA held the cash rate steady at 4.35% in November, reflecting their cautious approach to navigating Australia’s complex economic landscape. Inflationary pressures, while easing slightly, remain a core concern, with the Board reiterating their commitment to bringing inflation back within the target range of 2-3%. According to the minutes, they acknowledged the recent slowdown in consumer spending, a key driver of economic growth, and its potential impact on household confidence. This is a double-edged sword: while curbing inflation is crucial, prolonged financial strain on households risks dampening broader economic activity.
From a housing market perspective, these economic indicators are playing out in interesting ways. National property values continue to trend upward, albeit at a slower pace compared to the highs of the post-COVID boom. The latest data suggests a modest 0.4% growth in October, bringing annual price increases to 6.7%. However, affordability remains a major hurdle. Median house prices in our capital cities hover above $1 million, while national averages sit just over $800,000. With wage growth lagging significantly behind property price increases, the dream of homeownership is becoming more distant for many Australians.
Adding to the challenge is the ongoing housing supply shortage. Despite government policies aimed at stimulating construction, the sector is struggling under the weight of rising costs, labour shortages, and regulatory hurdles. The RBA minutes highlighted the role of these supply-side issues in exacerbating affordability pressures. This is especially evident in high-demand areas like the Sunshine Coast, where constrained supply is keeping upward pressure on prices, even as demand shows signs of moderating.
Meanwhile, insights from the broader market analysis suggest that the rental sector is experiencing its own set of challenges. With more Australians renting for longer, competition for affordable rental properties is fierce. Vacancy rates remain critically low in many regions, and rental price growth, while slowing, continues to outpace wage growth. This is creating a squeeze on renters, many of whom are already contending with cost-of-living pressures.
So, what does this mean for buyers and sellers as we head into the busy Christmas period and beyond? For sellers, the current market dynamics present an opportunity to achieve strong results, provided their pricing and presentation strategies are on point. Buyers, on the other hand, may find themselves in a more cautious position, weighing affordability concerns against the potential for future interest rate relief. While I’ve previously predicted a rate cut in early 2025, the RBA’s latest commentary suggests they’re in no rush, with some experts now pushing predictions into late 2025.
If you’re considering selling over the holiday season, now is the time to plan. I’ve recently written an article on the pros and cons of selling during Christmas—you might find it surprising. (Read it here).
As always, I’m here to help navigate the complexities of this evolving market. If you’d like to discuss your plans or access a free consultation, reach out to the team at Martinuzzi Property Group. And don’t forget to check out our latest property e-magazine for more insights and updates. Find it here: e-magazine link.
