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

Top Stories in Australian Property Market This Week:

1. Land prices rise: Land sales are increasing, indicating a modest recovery in the housing market, driven by rising prices, with land availability becoming a key concern for future home building. 
2. Record-high median house prices: Despite rising interest rates, almost half of Australian suburbs saw record-high median house prices by April 2024, driven by high demand and limited supply. 
3. Suburbs cracking $2 million: Property prices are rising rapidly, pushing more markets past the $2 million and $3 million marks. 
4. Super borrowers better off: Using superannuation for a home deposit could lead to greater financial gains in retirement, but it raises concerns about impact on housing affordability. 
5. Markets favouring first-home buyers: Increased affordability for first-home buyers in various regions across Australia outside capital cities, due to softer market conditions and higher listings. 

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Land prices rise  

Land sales are rising as many opt to build despite construction industry constraints.  

The latest HIA-CoreLogic Residential Land Report, analysing 51 housing markets across Australia, shows a “modest recovery” in lot sales, pushing up prices.  

HIA Senior Economist Tom Devitt notes stronger activity in Brisbane, Adelaide and Perth.  

“Residential lot sales picked up across Australia, increasing by 0.9% in the December Quarter to 10,666, to be up by 24.6% over the course of the 2023 calendar year,” Devitt says. 

“The fact that land prices are re-accelerating alongside such a modest recovery in sales volumes, suggests it will not be long before the number one constraint on new home building is, once again, the availability of land.”  

“State and local governments that do not help bring sufficient shovel-ready land to market – both greenfield and infill – will struggle to do their share of the Australian government’s national target of 1.2 million new homes over the next five years.” 

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Record-high median house prices 

Nearly half of all Australian suburbs reached record-high median house prices by April 2024.  

CoreLogic data shows 43.6% of suburbs hit record highs despite two years of rising interest rates.  

House prices increased by an average of 2.8% since April 2022, when interest rates started to rise. 

Tim Lawless, CoreLogic’s Research Director, notes a “short, sharp downturn” when rates first increased.  

Perth saw the highest average house value increase at 25.7%, while Hobart had the largest decrease at 11.2%.  

Western Australia had nine of the top ten growth suburbs, while 98% of Hobart suburbs saw a decline.  

“Buyers, including investors, have turned to Perth and Adelaide for their relative affordability, strong rental conditions and higher gross rental yields,” he says. 

“The demand has outweighed supply, which has contributed to pushing values significantly higher over the past year.” 

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Suburbs cracking $2 million  

Property prices are rising rapidly, pushing more markets past the $2 million and $3 million marks.  

Domain data shows four suburbs in three cities have joined the $2 million club, while Sydney’s Haberfield surpassed $3 million.  

The suburbs that exceeded $2 million in Q1 2024 are: 

– Pennant Hills, NSW: $2.076 million (up 9.3% from $1.9 million in Dec 2023) 

– West Ryde, NSW: $2.055 million (up 7% from $1.92 million) 

– Hawthorne, QLD: $2.075 million (up 6.7% from $1.945 million) 

– Sandringham, VIC: $2 million (up 2.4% from $1.9525 million) 

At the same time, four suburbs—Byron Bay, Noosa Heads, Hamilton (Brisbane) and South Yarra (Melbourne)—dropped out of the $2 million club.  

These areas saw significant price drops between 8.8% (South Yarra) and 24.7% (Hamilton) in Q1 2024. 

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Super borrowers better off 

First-home buyers using some of their superannuation for a deposit could be better off financially in retirement, according to new modelling. 

Modelling done by actuaries Michael Rice and Jonathan Ng, which was presented to the parliamentary committee looking at superannuation policies relating to home ownership, shows that a 35-year-old who withdraws $160,000 for a 20% deposit on an $800,000 apartment could be $1.2 million better off over 30 years in today’s dollars. 

Left in superannuation, the same amount would increase by only $319,000.  

The committee is considering the impact of using superannuation savings for home deposits.  

The Superannuation Funds of Australia argues this won’t help those struggling to save and may drive up property prices, benefiting mostly those who can already afford a property. 

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Markets favouring first-home buyers 

A new report highlights areas where softening market conditions make properties more affordable.  

The Property Pendulum report by Property Credit identifies “tangible shifts” favoring first-home buyers.  

Analysing over 300 markets for homes under $750,000, it notes increased listings.  

-Victoria, Latrobe Valley has 667 houses available under $750,000 with listings up 26%.  

-Tasmania, Launceston has 319 houses under $750,000 with listings up 17%.  

-New South Wales, the Lower Hunter has 302 houses with listings up 71%.  

-Queensland, Maryborough has 295 houses under $750,000 with listings up 24%.  

Property Credit CEO Giordano Stephancic says the report shows affordable options for first-home buyers, especially outside capital cities. 

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Catching up on Australian real estate news?

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

1. 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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