Wealth Street Journal: Week 17, 2024

Wealth Street Journal: Week 17, 2024

This week’s real estate news: Top 5 headlines

Explore the latest in Australia’s real estate news, covering rental growth in capital cities, the influence of Millennials and Gen X on property investment and the increasing presence of investors in the market:

  1. Investors & first-home-buyers back: In February, mortgage commitments rose by 1.5% to $26.4 billion, with first-home buyer loans increasing by 4.8%, indicating market resilience despite higher mortgage rates.
  2. Millennials & Gen X leading property investment: Over half of purchases attributed to them, showing a growing trend of independent purchasing and “rentvesting” in affordable areas.
  3. Regional house price growth: Regional house prices are surging, led by coastal and regional areas, outpacing capitals, driven by affordability and pandemic-induced shifts in preference, especially in Queensland.
  4. Capital cities to outperform regional markets: Canstar’s Rising Stars Report predicts capital cities to outperform regions in 2024, emphasising urban living’s appeal and Brisbane’s lead in growth prospects.
  5. Rents continue to rise: Rental growth surged in Q1 2024 mostly in capital cities, with the largest quarterly rise in 17 years. Pace is slowing despite ongoing pressure from a supply-demand imbalance.

Investors & first-home buyers back

New data from the Australian Bureau of Statistics indicates a rise in loans to investors and first-home buyers in February.

The figures show a 1.5% increase in mortgage commitments across the board during the month to the value of $26.4 billion.

Investor loans saw a 1.2% uptick, while first-home buyer loans surged by 4.8%, marking a 21% increase from the previous year, totaling 9,377 loans during February.

ABS head of finance statistics, Mish Tan, says investor loans contributed significantly to the overall growth in new loan commitments over the past year.

The total value of new loans written in February amounted to $26.4 billion, with $9.53 billion dedicated to investments.

NAB senior economist Taylor Nugent notes that the rise in loans to first-home buyers underscores the market’s resilience, indicating that higher mortgage rates are not deterring potential buyers from entering the market compared to renting.

Rise in loans loans for property investors and first-home buyers in February

Millennials & Gen X leading property investment

A new analysis by the Commonwealth Bank reveals that Millennials and Gen X accounted for over half of property investment purchases in the past year.

Millennials, born between 1981 and 1996, comprised 46% of new property investors in 2023, followed by Gen X, born between 1965 and 1980, representing 37% of all new investment property purchases.

The typical property investor now averages 43 years old, with an average loan size exceeding $500,000.

According to Commonwealth Bank Executive General Manager of Home Buying, Michael Baumann, about one-third of millennial property investors made purchases independently.

Baumann notes that some of these buyers are “rentvestors,” investing in affordable areas while renting where they prefer to live.

Nationally, the top postcodes for new property investment purchases in 2023 were 2000 (Sydney CBD, including Haymarket), 3029 (West Melbourne, including Hoppers Crossing), 2765 (North West Sydney, including Marsden Park), 3064 (North Melbourne, including Craigieburn) and 2155 (North West Sydney, including Kellyville).

Millennials & Gen X leading property investment

Regional house price growth

New PropTrack data reveals that regional house prices are enjoying their highest growth since March 2020.

According to PropTrack Senior Economist Eleanor Creagh, coastal and regional areas have seen the most benefit from affordability advantages and a shift in preference induced by the pandemic in recent years.

Over the past four years, regional home prices have surpassed those of their capital city counterparts in every state except Western Australia and the Northern Territory.

The best-performing regional market in the past four years was Regional Queensland with prices up 66.5% since March 2020, while Brisbane was up 63.15 during the same period. Other standout performers include:

  • Regional South Australia was up 66.2% and Adelaide was up 64%
  • Regional Western Australia was up 55.5% and Perth was up 57.3%
  • Regional Tasmania was up 53.6% and Hobart was up 36.1%
  • Regional NSW was up 51.6% and Sydney was up 34.7%
  • Regional Victoria was up 40.6% and Melbourne was up 17.2%
  • Regional NT was up 9.4% and Darwin was up 25.1%
  • The ACT was up 37.4%

Real estate news: Regional Queensland prices up 66.5% since March 2020

Capital cities to outperform regional markets

Canstar’s annual Rising Stars Report forecasts that capital cities will outperform regional markets this year.

Analysing 14 key property markets across Australia, including eight capital cities and six regional areas, the report identifies markets poised for property price growth in 2024.

According to Canstar ambassador Effie Zahos, while regional areas have seen strong price growth, the spotlight is now on capital cities.

“The allure of urban living is piquing our interest again,” she says.

She says that’s not to say there aren’t regional markets worth investing in, but our attention is turning back to the capital cities where pockets of affordability remain with all the benefits that come with urban living.

The report identifies 110 ‘Rising Star’ locations characterised by robust sales volumes, solid price growth, low vacancy rates and high rental growth, coupled with infrastructure spending and planned amenities.

This year, there is a notable increase in unit markets, reflecting the growing demand for more affordable housing options.

Brisbane leads the list of suburbs with the best prospects for future capital growth in 2024, followed by Adelaide and Sydney, with Queensland topping the regional market rankings.

Real estate news: Brisbane shows best opportunity for capital growth in 2024

Rents continue to rise

Rental growth surged in the first quarter of 2024, with combined capital house rents rising by 5% ($30).

The latest Domain Rental Report shows the increase was the largest quarterly rise in 17 years and the second highest on record.

It says the supply-demand imbalance is still clearly placing pressure on rents.

Despite this, the pace of growth is slowing, with rents rising three times slower than in the March quarter of 2023, and annual gains being the slowest since June 2022.

The report highlights record asking rents in most capital cities, except for Canberra houses and Hobart units.

Adelaide saw the highest increase in house rents at 5.4% during the quarter, followed by Perth (4.8%), Melbourne (3.6%), Brisbane (3.3%) and Sydney (2.7%). House rents were up by 0.7% in Canberra and there is no change in Darwin or Hobart.

Meanwhile, unit rents increased in most capital cities, except for Canberra and Darwin.

Real estate news: Australian rents continue to rise

Catching up on Australian real estate news?

Read last week’s real estate news article covering:

  1. Regional Australia’s investment potential: PRD Real Estate highlights regional areas as lucrative investment destinations, citing affordability and robust capital growth, with higher rental yields and top-performing LGAs.
  2. Surging unit values: Units rising faster than houses due to increased demand, especially in affordability-constrained markets, with Brisbane leading at 4.1% growth in the past quarter.
  3. Federal support for housing supply: The $500 million Housing Support Program aims to boost supply, addressing decades of undersupply. Urgent action is required to streamline planning systems and meet housing demand.
  4. Rising buyer activity: Loan Market reports a surge in pre-approval applications, signaling increasing buyer interest, with post-Easter auction activity resuming, particularly strong in Sydney.
  5. Property increases our wealth: ABS data reveals a 2.8% increase in household wealth, driven by property price hikes and gains in share markets, reflecting ongoing housing demand and seasonal market trends.

Exploring property investment?

Property investment offers numerous advantages, such as tax reduction, debt reduction, wealth generation and retirement planning.

Whether you’re a mortgage broker assisting clients, a seasoned investor, or someone starting out, Wealth Street’s proficient team is here to help navigate the complexities of property investment.

Offering expert guidance, extensive knowledge, real estate news and invaluable education, we ensure a prosperous investment journey for all.

Let us help you today.

“The allure of urban living is piquing our interest again... pockets of affordability remain with all the benefits that come with it.”

Effie Zahos

Canstar ambassador
Wealth Street Journal: Week 17, 2024

Effie Zahos, Canstar ambassador


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