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

The latest Australian real estate news:

1. New home sales rising: New home sales were up 8.8% in October, led by NSW, VIC, and QLD. Growth driven by easing building material costs, overseas and interstate population growth, and low unemployment.
2. Regional growth outpacing capital cities: Regional property markets, led by Queensland and Western Australia, are growing faster than capital cities due to affordability and lifestyle appeal.
3. National dwelling values hit new peak: National dwelling values reached a record $800K in November, with slower growth as new listings increase, but affordability in cities like Brisbane, Perth, and Adelaide continues to drive demand.
4. Federal parliament housing crisis laws: New laws introduced the Help-to-Buy Scheme for low- and middle-income earners and Build-to-Rent projects, aiming to boost homeownership and add 80,000 affordable rentals over the next 10 years.
5. Units outperforming house growth: Units are outperforming houses in price growth across capital cities and regional areas, driven by affordability pressures and increased demand from homebuyers.

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New home sales rising

Sales of new homes rose by 8.8% in October, according to the Housing Industry Association (HIA).

The increase was largely driven by growth in New South Wales, Victoria, and Queensland.

HIA Economist, Maurice Tapang, attributes the rise to easing building material costs, suggesting the market hit its lowest point in mid-2024.

Loans for new home purchases and construction in the September 2024 quarter were 14.3% higher than the same period in 2023.

The HIA’s Housing Scorecard highlights Queensland as the strongest market, driven by population growth from overseas and interstate.

“Following Queensland in these rankings are Western Australia and South Australia, where there is strong ongoing demand for building new homes. Exceptionally low unemployment rate, strong population growth and stable interest rates have sustained the key dynamics necessary for strong demand for new home building,” he says.

Renovation spending is also rising. KPMG analysis shows a 6.5% increase over the past five years, with renovations now accounting for 40% of residential construction spending.

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Regional growth outpacing capital cities

Regional property markets are outpacing capital cities, according to CoreLogic’s quarterly Regional Market Update.

Queensland and Western Australia dominate the top ten performing regional markets.

Mackay in Central Queensland recorded the highest growth at 8.3%, followed by Geraldton in WA (8.2%) and Townsville in Queensland (6.6%).

CoreLogic Economist, Kaytlin Ezzy, says affordability is a key factor in these areas’ success.

“Regions like Mackay, Geraldton, and Townsville are seeing exceptional growth, driven by affordability advantages compared to our major cities, as well as lifestyle appeal,” she says.

“This will have contributed to the strong demand but even with the impressive growth, for those with the capacity to service a mortgage, they still remain attainable with medians less than $600,000.”

Regional dwelling values rose 1.1% in the three months to October, compared with 0.8% growth in capital cities.

Bunbury in WA had the fastest property sales, with homes selling in an average of just 13 days.

Over the past five years, Busselton saw the highest dwelling growth (91%), followed by Maryborough (90.3%) and Bundaberg (90.1%).

Gladstone recorded the highest rent increase, with a rise of 81.6% over the same period.

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National dwelling values hit new peak

National dwelling values reached a new peak of $800,000 in November, following 23 months of consecutive growth.

The PropTrack Home Price Index shows national prices rose 0.2% in November. House prices increased by 0.2%, while unit prices fell by 0.1%.

PropTrack Senior Economist, Eleanor Creagh, says the pace of growth is slowing as new listings enter the market in some areas.

Hobart (0.5%) and Adelaide (0.4%) led monthly house price growth, followed by Brisbane and Canberra (both 0.3%) and Sydney (0.1%).

Melbourne was the only capital city to record a decline (-0.1%), while Darwin remained unchanged.

For annual growth, Perth, Adelaide, and Brisbane lead with house price increases of 19%, 15%, and 12%, respectively.

Creagh highlights that spring brought more listings, but stock levels remain historically low, with strong buyer demand absorbing new listings quickly.

She adds that the “comparative affordability” in Brisbane, Perth and Adelaide is what is driving demand in those cities.

“Although after the persistent strong growth, with home prices up around 80% over the past 5 years in each capital, that comparative advantage has been eroded,” she says.

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Federal Parliament housing crisis laws

Two significant laws aiming to address Australia’s housing crisis for both buyers and renters have been approved by Federal Parliament.

The first is the Help-to Buy-Scheme, designed to assist low- and middle-income earners in purchasing homes with the Federal Government as an equity partner.

Housing Australia will manage the scheme, offering up to 30% equity for eligible buyers taking out a loan to purchase an existing home and up to 40% for new builds.

The scheme will provide 10,000 “places” annually for four years. Eligible buyers need only a 2% deposit to qualify for a loan under this program.

The second law targets developers to promote Build-to-Rent projects, which aim to alleviate rental shortages.

This initiative is expected to deliver 80,000 rental properties over the next decade.

To qualify for tax benefits, Build-to-Rent operators must provide leases of at least five years and prohibit no-cause evictions.

Rent will be capped at 74.9% of market value or 30% of the tenant’s income, whichever is lower.

Real Estate Institute of Australia (REIA) President, Leanne Pilkington, says this is a “vital step in addressing the nation’s housing crisis.”

She notes that the scheme’s tax benefits will attract institutional investors to deliver rental housing, including affordable options.

“This is a significant step in stabilising the rental market but not the panacea; the role of small private investors will continue to be an integral part of the solution and the government needs to ensure tax settings remain the same; so as not to contract supply in this segment,” she says.

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Units outperforming house growth

The latest Housing Affordability Report from CoreLogic and ANZ shows that unit prices in capital cities rose slightly more than house prices during the three months to October 2024.

In October, median price growth for units surpassed that of houses in the five largest cities and the combined regions.

Over the past year, units have shown stronger price growth than houses in Brisbane, Adelaide, and Perth, the top three capital cities for market growth. Units have also outperformed houses in regional areas of Queensland, WA, NSW, and Victoria.

CoreLogic reports annual median price growth for units at 18% in Adelaide, 19% in Brisbane, and 24% in Perth.

The Hotspotting Research Hub reveals that Noosa Heads on the Sunshine Coast has seen a five-year average growth of 10% annually for houses and 17% for units. Similarly, Surfers Paradise on the Gold Coast recorded 8% annual growth for houses and 12% for units.

REA Group, the publisher of realestate.com.au, has pointed out areas where unit price growth is outpacing that of houses.

Megan Lieu, Economic Analyst at REA Group, says: “Historically, house values have risen at a faster rate than units, but with affordability pressures, units are being preferred by many homebuyers. In certain suburbs, unit prices have grown at more than double the rate of houses over the past year.”

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Catching up on Australian real estate news?

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

1. Property price growth to continue: Smaller capital cities like Perth, Brisbane, and Adelaide will lead property price growth in 2025, while Sydney and Melbourne may initially decline before rebounding post-interest rate cuts.
2. Regional demand outpacing supply: Regional living demand has doubled, causing housing shortages and lower rental vacancy rates, with 76,000 job vacancies but insufficient infrastructure.
3. Strata developments the solution: Australia has the potential for 3 million new strata units, with Melbourne leading at 1.2 million, as low-rise developments near transport hubs encounter less community resistance.
4. Affordable pockets in capital cities: Affordable properties still exist in capital cities, with units offering more options than houses, especially in suburbs with strong liveability standards.
5. Student housing has doubled: Purpose-built student accommodation has doubled in a decade, with 132,700 beds available, driven by private investment amid declining affordability in traditional rentals.

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