#43: Million Dollar Houses Spread, Rental Growth Slows, Home Guarantee Scheme Milestone, Construction Costs Rise & Housing Targets Lag
Christian Stevens
Helping You Build Wealth Through Property | CEO of Flint & Farmers' Finance Australia - Available 7 days ??
Million-Dollar Median House Prices Spreading Across Australia: Brisbane Hits $1M Mark
The December 2024 Domain House Price Report reveals Australia’s property market is slowing, with annual price growth at its lowest level since September 2023.
Brisbane has joined the million-dollar club, with its median house price reaching $1,016,192 in the final quarter of 2024.
Adelaide is close behind, with a median of $992,193, expected to surpass $1 million within weeks.
Perth may follow by the end of 2025, with 8-10% growth forecast.
Domain chief of research and economics Dr Nicola Powell said rising prices in cities like Brisbane and Adelaide reflect shifting demand from Sydney, where extreme property prices are driving buyers to more affordable regions.
Rental Market Stabilises as Growth Slows: Affordability Constraints Emerge
CoreLogic’s Quarterly Rental Review shows Australia’s rental market stabilising, with annual rent growth slowing to 4.8% in 2024 – down from 8.1% in 2023.
The December quarter recorded just a 0.4% rise, the smallest fourth-quarter increase since 2018.
Rental affordability pressures are mounting, with median rents consuming 33% of annual pre-tax household income – the highest level since 2006.
Since the onset of COVID, rents have risen 36.1%, or $171 per week.
CoreLogic economist Kaytlin Ezzy said demand has eased due to slowing net overseas migration and renters forming larger share households.
Meanwhile, increased investor activity, with lending up 26.3% in the year to September 2024, has slightly boosted rental supply.
Home Guarantee Scheme Reaches 200,000: Key Workers and Regional Buyers Benefit
Since its launch in January 2020, the federal government’s Home Guarantee Scheme (HGS) has helped over 200,000 Australians purchase homes.
The HGS allows eligible buyers to secure a property with as little as a 5% deposit (or 2% for single parents), backed by a government guarantee that removes the need for lender’s mortgage insurance.
Participants include 52% of buyers under 30, over half being women, and nearly 40,000 key workers like nurses and teachers.
Regional buyers have also gained significantly, with 67,000 homes purchased in regional areas, including almost 30,000 under the Regional First Home Buyer Guarantee.
New South Wales, Victoria, and Queensland have seen the highest uptake. For eligibility details, speak to a mortgage broker.
Construction Costs Rise: Builders Face Tight Margins
CoreLogic's Cordell Construction Cost Index (CCCI) shows residential construction costs grew 3.4% in the year to December 2024, slightly below the pre-COVID decade average of 4.0%.
However, costs have risen 30.8% since COVID began, squeezing builders’ profit margins.
The Australian Bureau of Statistics reported a 0.6% drop in new dwelling prices in November, driven by builders offering discounts to attract buyers despite rising construction costs.
Compounding challenges is a 10-year low in new dwelling commencements, with fewer projects entering the pipeline, raising concerns about future housing supply.
Australia Falling Behind Housing Construction Targets: 15,000 Homes Behind
Australia has fallen short of its ambitious goal to build 1.2 million homes by 2029, with just 43,247 homes constructed in the September 2024 quarter, according to the Australian Bureau of Statistics.
This figure falls 15,000 homes below the quarterly target of 60,000.
The Northern Territory lags furthest, achieving only 21.4% of its target, while Victoria narrowly missed its goal, delivering 15,316 homes.
The Property Council’s Matthew Kandelaars warned that delays now could worsen housing shortages in the future, driving up prices and further reducing affordability.
“We can’t afford to slip any further behind,” he said.
Newsletter Summary:
Australia’s housing market continues to evolve, with Brisbane achieving a $1 million median house price milestone, while rental growth slows due to affordability constraints.
The Home Guarantee Scheme has helped 200,000 Australians achieve home ownership, particularly in regional areas and among key workers.
Meanwhile, rising construction costs and falling building approvals are hampering efforts to meet ambitious housing targets, raising concerns about future supply and affordability.
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Christian Stevens - #1 Mortgage Broker in Australia
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