The Australian property market continues to defy expectations, with new Proptrack data revealing unprecedented growth across major cities and regional areas.
Despite economic headwinds including higher interest rates and cost-of-living pressures, robust demand and demographic shifts are reshaping traditional market dynamics, particularly in Queensland’s capital.
Market Hierarchy Undergoes Historic Shift
One of the most significant developments has been Brisbane’s emergence as Australia’s second-most expensive capital city, surpassing Melbourne.
According to REA Group Senior Economist Eleanor Creagh, this represents a fundamental shift in the traditional property hierarchy.
“Over the past decade, Melbourne has maintained a price premium over Brisbane.
“However, throughout the pandemic, Brisbane experienced significant population growth and heightened demand, partly due to its relative affordability and appeal,” Ms Creagh explains.
“These developments reflect broader trends affecting home price growth and market conditions across the capitals.”
Sydney Sees Growth Moderate Amid Listing Surge
Sydney’s market trajectory illustrates the broader cooling trend, with prices inching up just 0.08% in November to sit 4.55% above November 2023 levels.
At $1,112,000, Sydney remains Australia’s most expensive capital city.
Growth across Sydney has been uneven, with stronger performance in some regions than others.
Areas such as Sydney’s Inner South West have recorded 7.6% annual growth, while Blacktown (7.43%), South West (7.09%), and Parramatta (6.78%) also show solid gains.
“While the increase in properties hitting the market in Sydney this year has been met with strong demand, greater stock for sale has been a contributor to the sharp slowing of price growth, along with affordability constraints and the sustained higher interest rate environment,” Ms Creagh explains.
Perth Leads National Growth Despite Market Maturity
Perth continues to dominate the nation’s capital cities with an 18.74% annual increase, prompting questions about its sustained strength.
Ms Creagh points to multiple factors driving this growth, including Perth’s relative affordability, which is a key driver.
“Despite recent gains, housing values remain affordable compared to other capital cities after a decade of underperformance relative to East Coast capitals,” she says.
“Low stock levels are also intensifying competition, with total properties listed for sale down 30% relative to the prior-decade average in October 2024.”
Regional Markets Show Resilience as Capital Cities Cool
The spring selling season has introduced new market dynamics, with regional areas outpacing capitals in November.
“Annual price growth in the combined capitals (5.55%) has just outpaced regional areas (5.48%), but capital city buyers have been spoilt for choice with the surge in new listing volumes through spring,” Ms Creagh explains.
Melbourne’s Continued Challenges
Melbourne’s market presents a stark contrast, with prices falling for seven of the past eight months bringing them 1.63% below November 2023 levels, with subdued conditions, she says, due partly to greater buyer choice and higher property taxes.
Ms Creagh also identifies multiple factors beyond the well-documented property taxes and construction levels.
“Land tax increases for investment properties in Victoria have discouraged investment and made owning an investment property less attractive.
“As a result, more investors have been selling properties in Melbourne, while the state hasn’t seen the same uplift in new lending to investors that other states have.
Strong Demand Persists Despite Headwinds
Despite higher interest rates and affordability pressures, buyer demand remains robust.
Ms Creagh attributes this resilience to several factors.
“July’s tax cuts boosted borrowing capacities and buyers’ budgets, while the persistent growth in home prices of recent years is likely motivating many to overcome affordability challenges.
Elevated population growth, the deterioration in rental affordability, resilient labour market conditions, and home equity gains continue to bolster demand.”
Affordability Challenges Mount
The $800,000 national median presents significant accessibility challenges.
“An average-income household would need to save 20% of their income for close to six years to save a 20% deposit on a median-priced home,” Creagh notes.
“Lower interest rates should ease housing affordability somewhat next year.
“But meaningful, long-term improvement will require structural changes to the housing market to make more homes available.”
Looking Ahead
With the market having grown nearly 46% since the pandemic began, Creagh suggests a moderation in growth rates ahead.
“Over the months ahead, home prices are expected to lift, though the pace is expected to remain softer, trailing the strong price growth over recent years,” she concludes.
The Australian property market reached a historic milestone in November 2024, with several significant trends emerging across major markets:
National Performance
- Median home value exceeds $800,000 for the first time
- 23 consecutive months of price growth
- Nearly 46% growth since the pandemic began
Capital City Performance
- Sydney remains the most expensive capital at $1,112,000, though growth has moderated to 0.08% monthly
- Brisbane has overtaken Melbourne as the second most expensive capital
- Perth leads annual growth at 18.74%
- Adelaide shows strong performance at 14.64%
- Melbourne struggles with -1.63% annual decline
Market Dynamics
- Regional markets are outpacing capitals (0.26% vs 0.11% monthly growth)
- Spring listing surge is moderating price growth in major cities
- Strong demand persists despite affordability challenges
- Population growth, tax cuts, tight rental conditions, and strong employment continue supporting prices
Looking Ahead
- Price growth is expected to continue but at a more moderate pace
- Affordability remains a key challenge, with deposit hurdles growing
- Structural changes needed for long-term market accessibility improvement
All data sourced from PropTrack Home Price Index, November 2024.
