Property Market Trends: November 2024

The Australian property market continues to be influenced by a mix of global and domestic economic factors. Here’s a closer look at the current dynamics and potential impacts for property buyers and investors:

Current Property Market Trends

1. Resilience Despite Rate Rises:

• Home Prices: Australian property prices have remained relatively resilient in 2024, with modest growth in most capital cities. This is partly due to constrained housing supply, population growth, and sustained demand for high-quality residential properties.

• Rental Market: The rental market remains tight, with record-low vacancy rates in many areas leading to rising rental yields, especially in urban centres and popular regional markets.

2. Investor Confidence:

• The strong performance of Australian equities in November, combined with stabilising bond yields, has contributed to a "risk-on" sentiment among investors. Property remains an attractive option, particularly for those seeking long-term stability amid market volatility.

Outlook for the Property Market

1. Interest Rates & Borrowing Costs:

• While the RBA’s steady cash rate is providing some predictability, high interest rates are still limiting borrowing capacity for many buyers. If rate cuts begin in mid-2025, this could ease affordability constraints and reignite demand in the property market.

• In the meantime, buyers are likely to remain cautious, with affordability remaining a concern for first-home buyers and upgraders.

2. Supply Challenges:

• Housing supply remains a key issue, with construction activity subdued due to higher costs, labour shortages, and financing difficulties for developers.

• This limited supply, especially in metropolitan areas, is expected to continue supporting property prices despite higher interest rates.

3. Regional vs. Urban Markets:

• Regional markets have seen strong demand in recent years, driven by lifestyle changes and hybrid work arrangements. However, urban markets are regaining momentum as migration increases and workers return to cities.

4. Investor Activity:

• Domestic Investors: High rental yields and rising rents make property investment attractive, especially for those leveraging equity in existing assets.

• Foreign Investors: A weaker AUD is providing opportunities for overseas buyers, although the lack of significant Chinese stimulus remains a limiting factor for some regions heavily reliant on international investment.

Key Factors to Watch

1. Population Growth:
   Continued growth in Australia’s population, particularly from immigration, will likely drive demand for housing, putting upward pressure on prices and rents in the medium term.

2. Government Policies:
   Policies aimed at increasing housing supply, improving affordability, or incentivising first-home buyers may play a significant role in shaping market dynamics.

3. Economic and Market Sentiment:
   Any unexpected economic shocks—whether domestic or global—could influence buyer confidence and investment activity in the short term.

Opportunities for Buyers and Investors

• First-Home Buyers: Consider leveraging government incentives and grants where available to offset affordability challenges.

• Upgraders: Strategic planning can help navigate high borrowing costs in the current market.

• Investors: The combination of tight rental markets and strong yields presents an opportunity, particularly for those focused on cash flow-positive properties.

At Lumière Financial, we help clients navigate the property market by aligning mortgage solutions with broader financial goals. Whether you’re looking to buy, invest, or refinance, our team is here to guide you through this evolving landscape.

This update is for informational purposes only and should not be considered financial advice.