Different Markets. Different Gears: Australian Economic and Property Report 2024

PRD’s Chief Economist, Dr Diaswati Mardiasmo commented “although there is a similar baseline throughout Australia (i.e. stable cash rate, increasing inflation rate, higher cost-of-living, stagnating wage growth), the balance between the ‘stickiness’ of buyers and housing supply in each market is very different. The overall trend might look the same, however, a closer look reveals multiple speeds.”

Titled ‘Different Market. Different Gears.’, PRD’s latest PRD Australian Economic and Property Report 2024 aptly portrays how each market is currently moving at various paces and directions, depending on the demand and supply balance of that specific area. Regardless of if an area is a capital or more regional, we are seeing local areas still recording different levels of price growth, yet simultaneously other areas are recording declining prices.

"At present, there are many moving pieces in the economy, evident in the variety of red (cautious - need to pay increased attention to), yellow (somewhat stable - need to carefully monitor) and green (go! - healthy market conditions) ‘health of the market indicators’ throughout this report. For once, there is no one dominant colour," Dr Mardiasmo said.

PRD’s Managing Director, Todd Hadley stated “the first half of 2024 showed how fast things can change. Many went into 2024 expecting a cash rate cut towards the end of 2024, now we are expecting a cash rate hike, with a potential cash rate cut in mid-2025. This could play havoc with property plans.”

Key findings:

• Across all the greater capital cities we are seeing a market recovery, however at different speeds. Greater Brisbane grew by 17.0% in the past 12 months to June 2024, outpacing Greater Melbourne at 14.6%.
• Regional markets are in different gears, but overall, we can see a slight correction of -4.3% in the past 12 months to the 1st half of 2024. Regional Western Australia is in fifth gear, recording a 12.7% median house price growth in this period, whereas regional Victoria and Tasmania are in first gear, recording -5.1% and -7.7% growth rates respectively.
• Australia’s vacancy rates were 1.7% in June 2024, representing a stable vacancy rate when compared to June 2023. This is the first stability since post-COVID-19, which indicates the balance between rental supply and demand has not changed. This creates some hope for renters.
• In June 2024, the Time to Buy a Dwelling Index indicated that most states recorded a declining trend. Tasmania recorded the highest reading of 109.6 index points as of June 2024, making it the first state to record over 100.0 index points since December 2021.
• Since March 2024, the proportion of investor finance increased to 37.0%, which is good news for renters. This is even higher than pre-COVID-19, which averaged at 29.0% in 2019. Investor finance has steadily increased since mid-June 2023, after declining due to cash rate hikes.

What can we expect for the rest of 2024 and early 2025?

“The question we mostly receive, is how many more months before something else (i.e. a cash rate hike) happens? For now, it looks like all we can do is hold tight and make the best financial decision for your own needs, as we ride the different gears of each property market,” said Dr Mardiasmo.

“Without a doubt, the property market is still experiencing similar issues to what we faced in 2023. These challenges will persist for the next few years, as we look for innovative solutions. The good news is housing and cost-of-living was forefront in the Federal Budget 2024, as well as in the state level budgets, and there are multiple initiatives to tackle the issues,” Mr Hadley said.