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

1. Resilient new home sales: Despite a November dip, new home sales are on track to outpace 2023 levels, with steady buyer confidence fuelled by stabilising building costs and low unemployment.
2. Rising property market confidence: Confidence in the property sector grew by 8 points in late 2024, driven by optimistic price growth expectations, despite affordability and supply challenges.
3. Seasonal rental vacancy surges: Vacancy rates hit a 3-year high of 1.4% in November, with inner-city areas like Sydney CBD (6.4%) and Melbourne CBD (5.9%) seeing significant increases.
4. Apartments above shopping centres: Scentre Group may develop residential apartments above Westfield shopping centres, leveraging urban locations to address housing shortages.
5. Affordable suburbs in 2025: Experts named affordable suburbs with strong growth, including picks in Melbourne, Sydney, Brisbane, and key areas in South Australia and Western Australia.

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Resilient new home sales

New home sales are expected to finish 2024 strong despite a dip in November, according to the Housing Industry Association (HIA).

Sales are projected to surpass 2023 levels by year-end.

The latest HIA New Home Sales Report shows sales rose 8.8% in October but dropped 10.1% in November.

HIA Economist, Maurice Tapang, says despite those fluctuations, all indicators show an improvement in market confidence through the course of 2024. And he believes the market will continue to improve in 2025.

“Stabilising home building materials costs, a return to normal build timeframes, low unemployment and unchanged cash rate settings have provided the certainty that new home buyers need,” Tapang says.

“The rise in sales has been geographically dispersed, with markets such as Queensland, South Australia and Western Australia faring better than the two largest states.”

“As the volume of established homes available for purchase and rent remains inadequate to service growing demand, buyers are increasingly returning to the new home market.”

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Rising property market confidence

Confidence in the property market grew in late 2024 despite no interest rate cuts, according to the December 2024 Procore/Property Council Industry Sentiment Survey.

Industry confidence rose by eight points, though concerns about housing supply, affordability, and construction challenges remain.

South Australia led in confidence, followed by New South Wales, Queensland, and Western Australia.

Victoria had the lowest confidence levels.

Property Council CEO, Mike Zorbas, highlighted rising expectations for property price growth.

However, the survey says housing affordability and supply are the most critical issues facing the property sector.

Zorbas says urgent government intervention is needed to deliver more homes.

“Solving the housing crisis requires action on all fronts – from reducing costs to cutting red tape and fostering greater investment,” he says.

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Seasonal rental vacancy surges

Rental vacancy rates climbed to 1.4% in November, marking the highest level in three years, according to SQM Research.

Vacant rental properties increased to 41,894 from 36,486 in October, mainly due to seasonal trends.

Vacancies reached 2% in Melbourne, 1.8% in Sydney, and 1.1% in Brisbane, remaining below the 3% threshold for a balanced rental market.

Inner-city areas had much higher vacancy rates: Sydney CBD (6.4%), Melbourne CBD (5.9%), and Brisbane CBD (2.4%).

SQM Managing Director, Louis Christopher, attributed the rise to economic pressures and seasonal factors, saying:

“At this time of year, we normally record a seasonal increase in vacancies driven in part by university graduates completing their courses and returning home.”

Christopher also noted that high living costs are encouraging more people to share housing, freeing up rental properties.

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Apartments above shopping centres

Apartment shopping could soon coincide with grocery runs if Scentre Group redevelops its Westfield shopping centres.

The company owns 42 Westfield centres in Australia and New Zealand and is considering building residential apartments above its properties.

CEO Elliott Rusanow says this strategy could drive long-term growth and address housing shortages.

“Our Westfield destinations are located in and around existing civic and transport hubs – places where densification is already occurring,” he says.

“These substantial land holdings, when combined with their strategic locations, have the potential to be part of addressing the housing supply issues in both countries.”

Associate Director at the University of New South Wales City Futures Research Centre, Hal Pawson, says the airspace above shopping centres could provide an option for valuable housing stock.

“It’s far preferable to be doing it in sites like that than on the fringes of cities,” he says.

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Affordable suburbs in 2025

Experts from REA Group’s Hot 100 have identified affordable suburbs to watch in 2025.

Cameron Kusher, REA’s Director of Economic Research, noted a focus on affordable areas this year.

Suburbs were chosen based on growth drivers, including affordability, amenity, family appeal, location, investment prospects, gentrification, population growth, demographic change and infrastructure spending.

Anne Flaherty, REA Economist, predicts Melbourne’s market will grow strongly, stating:
“If you look at the fundamentals of Melbourne’s property market, it is forecast to be the strongest growing capital city (for population), it has the most diverse local economy, it attracts very high numbers of international students and international migrants.”

Among the top 10, highlighted suburbs include Mayfield, Enmore, and Prestons in NSW; Braybrook and Geelong West in Victoria; and Coomera and Herston in Queensland.

South Australia’s top picks include Andrews Farm, Munno Para West and Christie’s Beach, while Western Australia features Bassendean, Bayswater and Scarborough.

Flaherty notes that some of the selected suburbs may benefit from nearby amenities or emerging gentrification.

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Catching up on Australian real estate news?

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

1. Property worth $11.1 trillion: Australia’s property market now exceeds $11.1 trillion in value, making up over 50% of household wealth, driven by regional growth and high property sales.
2. Residential listings rising: Residential property listings increased by 7.6% in November, largely due to unsold stock, with Perth leading the growth at 20%.
3. Regional demand increasing: Regional areas are seeing sustained demand, with 35.6% of movers relocating from cities, driven by affordability and strong job markets.
4. First-home buyers still active: Government schemes continue to support first-home buyers, enabling nearly 100,000 purchases with just a 5% deposit since 2020.
5. Rent growth slowing nationally: Rental growth slowed to 7% over the past year, halving from the previous year, though rents remain significantly higher than pre-pandemic levels.

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