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:
- 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. - 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.
- 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
invest.
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
investment.
Rising rental costs: Increasing rental costs are encouraging renters to consider buying
instead.
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. - 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.
- 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. - 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.
Visit our website www.tomorrowfs.com.au to learn more about our services or call us right away to talk to one of us at +61 03 9193 3634
