This week’s Australian real estate news: Top 5 headlines

Explore the newest developments in Australian real estate news:

1. Where rents are rising fastest: Australia’s median rent is $627 per week, with significant variations across cities and regions, driving renters to seek more affordable options in outer areas.
2. Listings remain tight: Residential listings dropped 6.4% in April, though up 5.6% from last year. Despite monthly fluctuations, a YoY rise persists. Market caution is expected, potentially leading to price falls in major cities later in 2024.
3. Future tradies government funded: The Federal Government is investing $91 million to address the shortage of skilled construction workers through training programs, emphasising easier qualification recognition for migrants.
4. Foreign investment surge: Overseas investors are driving a surge in Australian property investment, particularly in Sydney, with purchases mainly focused on higher-end properties, leaving minimal impact on first-home buyers.
5. Unit developments must double: Australia must double apartment construction to meet the government’s target of 1.2 million homes in five years, with forecasts showing significant growth in unit construction, driven by the 2032 Olympic Games in Brisbane and the build-to-rent sector.

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Where rents are rising fastest

Australia’s median rent is $627 per week, with many tenants paying more according to a new analysis by CoreLogic.

Hobart has the lowest median rent at $547 per week, while Sydney has the highest at $770.

Regional areas also rising, with a median rent of $540 per week.

CoreLogic Head of Research, Eliza Owen, says renters are moving to more affordable outer areas as central metropolitan locations become too expensive.

In the capital cities, Perth saw the highest rental growth, up 13.6% to $669 per week in the last 12 months.

Melbourne’s rents rose 9.6% to $589, Sydney’s by 9% to $770 and Adelaide’s by 9.1% to $589.

Brisbane rents increased by 8.5% to $649, Darwin by 3.5% to $617 and Hobart’s rents decreased by 0.2% to $547.

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Listings remain tight

Residential property listings fell 6.4% in the past month, per SQM Research.

Listings dropped from 256,000 in March to 239,660 in April, mainly due to school holidays and Easter according to SQM Research Managing Director, Louis Christopher.

“We are seeing a continued year-on-year rise at the national level,” he says.

Despite the monthly drop, listings are up 5.6% compared to last year.

Melbourne saw a 17.7% rise in listings over the past 12 months, and Sydney increased by 12.8%.

New property listings, those listed within the past 30 days, rose by 10.6% over the past year.

“As the realisation sets in for all market participants that an interest rate cut is not imminently coming, we expect market caution to build over the winter months and so do not at this time rule out some housing price falls in our largest capital cities for the 2nd half of 2024”, Christopher says.

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Future tradies government-funded

The Federal Government is committing $91 million to increase skilled construction workers.

The plan aims to add almost 22,000 new workers to the sector.

Master Builders Australia’s Denita Wawn says only half of those leaving the industry each year are being replaced.

The upcoming budget includes $62.4 million for 15,000 fee-free training places in TAFE and VET colleges.

It also includes $26.4 million for 5,000 pre-apprenticeship programs and $1.8 million to expedite skills assessments for 1,900 potential migrants.

Wawn highlights the importance of easier qualification recognition for skilled migrants.

A review found skills assessments can take up to 18 months and cost nearly $10,000, which is time and money people don’t have.

Housing Industry Association’s Managing Director Jocelyn Martin urges the government to continue subsidising companies that hire apprentices.

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Foreign investment surge

Overseas investors spent $5.3 billion on Australian property in less than a year, according to Federal Treasury data.

There were 4,700 residential purchases by international buyers in the first three financial quarters of 2023.

Of these, 1,955 homes were bought by China-based investors, 400 by Hong Kong-based investors and 259 by Vietnam-based investors.

PropTrack director Cameron Kusher says foreign investment accounts for a small portion of Australia’s property market.

These buyers typically purchase higher-end properties, not impacting first homebuyers.

“International investors are not impacting the lower end of the market,” Kusher says.

“Australia is a popular destination for international investors, but these overseas buyers are not impacting the market.”

The data shows that many overseas-based investors are securing properties in Sydney.

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Unit development must double

Australia needs to double apartment construction to meet the government’s target of 1.2 million homes in the next five years, says the Housing Industry Association (HIA).

The HIA Economic and Industry Outlook report shows apartment development has halved since 2016.

HIA Chief Economist Tim Reardon forecasts 95,380 detached homes will start in FY2024, with a slow recovery to 97,770 in FY2025 and over 110,000 by FY2027.

Predictions for unit construction are 64,350 in FY2024, 78,280 in FY2025, and 93,480 in FY2026.

Growth will be driven by the 2032 Olympic Games in Brisbane and the build-to-rent sector.

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Catching up on Australian real estate news?

Read last week’s Australian real estate news article covering:

1. 1. Rising house building approvals: Building approvals for houses and units increased, notably in VIC and NSW, despite higher construction costs. House approvals rose by 3.8% in March, with residential building values up by 8.7%.
   2. Buying over renting: Rents are rising faster than mortgages, prompting interest in buying. Rental prices rose by 7.7% in the past year, the sharpest increase since 2009, while new mortgage inflation increased by 5.1%.
   3. Regional growth outpaces cities: Regions are outpacing capital cities in property price growth at 0.8%, with combined regional property values nearing $623,000 by April 2024, compared to a mere 0.6% increase in capital city prices during the same period.
   4. Build-to-rent sector growing: Australian build-to-rent (BTR) sector is growing, labelled as a “resilient asset class” by Savills Australia. Investment in the sector surged in 2023, more than tripling compared to the previous five-year average.
   5. Buyers targeting units: Buyers are favouring units over houses due to the widening value gap, especially in major urban areas where existing units are more affordable than new properties.

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