Top 5 headlines from this week’s Australian real estate news

1. More investors needed now: Australia has a shortage of property investors, with 35,000 fewer investors over the past five years, exacerbating the housing crisis and the need for rental properties.
2. Building approvals still falling: Building approvals have declined, and Australia is falling short of its target for new dwellings, delaying efforts to meet the housing needs of the growing population.
3. Rents rise, growth slows: The growth in rents has slowed significantly, with national rent increases dropping from 11.5% in 2023 to 6.9% in 2024, signalling easing market conditions for renters.
4. Buyers gaining market advantage: Higher listings and slower price growth, is giving buyers more leverage in certain locations, although conditions still vary by region.
5. Tight supply driving prices: The supply shortage in 25 key locations across Australia is driving price increases, with some regions expected to see over 10% capital growth in 2025.

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More investors needed now

Attracting more investors to the property market is crucial to easing Australia’s housing crisis, according to new research.

The analysis by the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) highlights a shortage of property investors, with tens of thousands more needed to address ongoing market challenges.

Australia has fallen short of nearly 35,000 property investors over the past five years.

Between March 2019 and March 2024, Australia’s population grew by 1.8 million, creating a need for an additional 212,000 rental properties.

This requires an increase of 145,000 investors, but ATO data shows only about 111,000 additional investors have entered the market.

PIPA chair Nicola McDougall cites several barriers limiting the number of investors, including stricter lending policies, regulatory changes, and tax increases.

PICA chair Ben Kingsley points out that investor activity is far below what’s needed to accommodate Australia’s growing population.

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Building approvals still falling

Building approvals declined towards the end of 2024, with new Australian Bureau of Statistics (ABS) data showing approvals in November fell by 3.6% from the previous month.

The latest data, released in January, shows declines across all residential building types, confirming that Australia is falling short of its goal to build 1.2 million new homes by mid-2029.

ABS head of construction statistics, Daniel Rossi, notes that house approvals were down 1.7%, while approvals for other residential properties (units, apartments, and townhouses) dropped 10.8%.

Queensland was the only state to show growth in private sector house approvals in November, with a 4.3% increase.

Unit approvals outpaced house approvals in every state, with a particularly large gap in Victoria (4,644 units approved vs. 2,567 houses).

New South Wales had 3,539 units and 1,744 houses approved, Queensland 3,259 units and 2,026 houses, South Australia 1,104 units and 895 houses, and Western Australia 2,085 units and 1,518 houses.

Despite the drop in approvals, the value of residential construction rose, reflecting higher development costs.

ABS data shows the total value of building approvals rose by 6.6% in November to $14.32 billion.

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Rents rise, growth slows

Rents across Australia continue to rise, but the pace has slowed to its lowest in over three years, according to new analysis from the REA Group.

Nationally, rents increased by 6.9% in 2024, compared to a growth of 11.5% in 2023.

REA Group senior economist Paul Ryan notes that advertised rents in capital cities grew by 1.6% in the December quarter, reaching $640 per week. Most capital cities saw no increase during this period, except for Brisbane (up 1.6%) and the ACT (up 3.3%).

Although rents in Sydney did not increase last quarter, it still has the highest median asking rents: $780 per week for houses and $700 per week for units.

Nationally, unit rents in 2024 rose by 7.1% to $600 per week.

Ryan attributes the slowdown in rent growth to several factors, including more rental listings and cost-of-living pressures reducing tenants’ ability to afford higher rents.

“The pace of rent growth across the country is slowing, with market conditions easing for renters,” says Ryan.

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Buyers gaining market advantage

While property prices remain high, changes in some key fundamentals are beginning to tilt the market in favour of buyers in certain locations.

CoreLogic head of research Tim Lawless observes that price growth (the national average) has slowed, listings are up, and purchasing activity is down, theoretically creating a better environment for buyers. However, this varies by location, with prices still rising in most cities and regional areas.

CoreLogic data shows that at the end of 2024, the number of listings was 3.8% higher than the same time in 2023. It says total stock levels accumulated through spring and early summer.

Listings in Sydney, Melbourne, Brisbane, Adelaide, Perth, and Canberra were higher compared to 2023, while Darwin and Hobart saw fewer listings.

The national average days on the market increased from 28 days in much of 2024 to 33 days in the December quarter. Again, there are regional differences.

Lawless notes that while selling conditions have shifted in favour of buyers in some areas, the median vendor discount rate tightened slightly to -3.6% for the three months ending December 2024, compared with -3.8% a year earlier.

“This suggests that sellers have been relatively realistic when setting initial listing prices and have become more willing to meet the market,” says Lawless.

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Tight supply driving prices

A new report identifies 25 Australian locations where supply is so tight that prices are likely to rise.

The report by InvestorKit analyses 330 regions and shows that Australia’s most undersupplied markets are spread across Western Australia, South Australia, and Queensland.

InvestorKit founder Arjun Paliwal explains that, compared to 2023, the supply crisis has shifted from major capital cities to smaller capitals and regional areas.

He adds that a lack of supply has driven price growth across Australia in 2024.

“Our forecast, especially for the seven regional centres, is that they will all see upwards of 10% capital growth in 2025,” says Paliwal.

The 25 locations where supply is tightest are:

• Queensland: Cairns South, Townsville, Mackay, Rockhampton, Gladstone, Forest Lake–Oxley, Carindale, Toowoomba, Darling Downs–East.
• South Australia: Prospect–Walkerville, Mitcham, Port Adelaide–East, Onkaparinga, Charles Sturt, Marion, Tea Tree Gully.
• Western Australia: Fremantle, Bunbury, Bayswater–Bassendean, Joondalup, Belmont–Victoria Park, Canning, Stirling, Cockburn, Melville.

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Catching up on Australian real estate news?

Read our last Australian real estate news article covering:

1. Australia’s property market thrives: Despite sensational media headlines, the Australian property market remains strong, with 11 of 15 regions experiencing growth in 2024.
2. 2025 market shifts ahead: Key drivers like interest rates, population growth, and construction costs will shape the 2025 property market, with supply challenges continuing to push prices higher.
3. Investor activity surges nationwide: Investor loans are outpacing owner-occupier loans, driven by strong rental demand, rising yields, and migration, with Western Australia and Queensland leading the growth.
4. Rising prices predicted 2025: National property prices are expected to grow in 2025, with momentum likely to pick up following anticipated interest rate cuts in the year’s second half.
5. Affordability drives unit surge: Demand for more affordable housing is fuelling unit price growth, especially in Brisbane, Adelaide, and Perth, where units outperformed houses in 2024.

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