The Perfect Time to Invest in Australia’s Property Market

Australia’s property market is poised for significant growth, making it an ideal time for
investors to take the plunge. According to KPMG’s latest property report on Australia’s
capital cities, house prices are projected to rise nationally by 4.9% over the next nine months
and then surge by 9.4% in the year to June 2025. Apartment prices are also on the upswing,
with an average increase of 3.1% expected by next June, followed by a 6% increase in the
next 12 months.
Here’s why this is the best time to invest in Australia:

  1. Regional Differences in Growth
    While the national projections are promising, there are important regional differences. Perth
    houses are expected to experience the highest rise of 8.4% in the rest of FY24, but then
    Hobart will overtake other cities in FY25, surging by an impressive 14.2%. Hobart units also
    outperform all other capital cities with rises of 8.7% and 10% respectively over the next two
    years, followed by Sydney, Melbourne, and Adelaide.
  2. Supply and Demand Dynamics
    The report highlights that property prices are influenced by various factors, with push and
    pull factors counterbalancing each other. However, the limited supply of housing and high
    demand are expected to outweigh other factors, such as interest rates. Dr. Brendan Rynne,
    KPMG Chief Economist, notes that constrained supply will likely dominate the short-term
    influences on property prices, resulting in continued gains in most markets during FY24.
    Furthermore, a scarcity of available land, falling approval levels, and slower construction
    activity will continue to limit dwelling supply.
  1. Factors Boosting Prices
    Several factors are contributing to the expected rise in property prices, including:
    Higher demand: Heavier migration is driving higher demand, making it an opportune time to
    Anticipated rate cuts: With expected rate cuts moving into FY25, property prices are likely
    to rise further.
    Relaxed lending conditions: Potentially easier lending conditions can facilitate property
    Rising rental costs: Increasing rental costs are encouraging renters to consider buying
    Barriers to new home construction: Constraints on new housing development are
    supporting the growth of existing property values.
    Foreign investor demand: Foreign investor demand is picking up, particularly with the
    reopening of borders.
  2. Regional Variations
    The property market dynamics vary across different cities, leading to considerable regional
    variations in price growth. While Adelaide houses outperformed the national average,
    Sydney and Melbourne experienced price decreases over the year to June 2023.
  1. Changing Factors Since the Pandemic
    Several factors have evolved since the height of the pandemic. The Home Builder stimulus
    led to a surge in housing approvals and completions, but dwindling approvals and rising
    building material costs are currently constraining housing supply. Migration, which declined
    during the pandemic, is expected to rise by over 400,000 this year, while foreign investment
    is gradually recovering.
  2. Rising Rental Costs
    Rising rental costs play a significant role in pushing up dwelling prices, as more renters
    aspire to become homeowners. Projections suggest that annual rent growth will be 5.6%
    over the next two years, which is higher than the long-term average. This increased demand
    for property ownership is contributing to the overall growth of the property market.
    In conclusion, the combination of limited supply, high demand, changing factors, and rising
    rental costs makes this an excellent time to invest in Australia’s property market. Whether
    you’re looking for a solid investment opportunity or a new place to call home, the Australian
    property market holds great promise for the savvy investor.

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