Australia’s two-speed market explained

The country’s property market has been characterised over the past year by a two-speed trend. Some cities have experienced significant growth in dwelling values, while others have remained stagnant or even declined.

In Perth, Brisbane and Adelaide, property prices have soared, up 22.6%, 13.0% and 15.0% respectively in the 12 months to October, according to CoreLogic.

On the other hand, cities like Melbourne, Hobart and Darwin have seen declining values, falling 1.9%, 1.2% and 0.1% respectively.

Meanwhile, Sydney and Canberra have seen some growth but not nearly as much as others, rising 3.7% and 0.4% respectively.

So why are some cities soaring, others stagnating and some declining? There are several reasons.

1. Relative affordability

The three cities that have shown the most growth over the past year were traditionally more affordable relative to locations like Sydney and Melbourne. Despite recent price increases, homes in these cities remain more accessible to more buyers. For example, the median dwelling value in Sydney was $1,193,240 in October, compared to $804,621 in Perth.

This affordability attracts not only first home buyers and buyers with a lower budget but also investors looking for better returns. Lower entry costs allow buyers to secure properties with a smaller deposit, which is particularly appealing in the current high interest rate environment.

2. Strong local economies

The economies of Perth, Adelaide and Brisbane have remained strong over the last year. Western Australia was named the strongest economy in the October edition of the Commonwealth Bank’s State of the States report. It was followed by South Australia in second and Queensland in third. Victoria, on the other hand, fell to fourth place.

Perth and Adelaide both benefit from strong mining and resources sectors, which drive and attract both overseas and interstate migration. Brisbane is seeing a surge in infrastructure and other investments ahead of the 2032 Olympic games, boosting economic activity and creating jobs.

3. Population growth

Spurred on by their strong economies, Perth, Adelaide and Brisbane have all seen strong population growth over the last year. According to the Australian Bureau of Statistics, over the 12 months to March 2024, WA’s population grew 3.1%, SA 1.5% and QLD 2.5%.

This has led to increased demand for homes, both by owner-occupiers and investors, placing upward pressure on prices in these locations.

4. Fewer listings

The supply imbalance in the top-performing cities has added to the price growth. The number of properties for sale in these markets has been lower over the past year. Listings in Perth were down 7.4% in October compared to the previous year.

Highlighting the heightened competition for homes, the median days on market in these cities have also declined, showing how quickly properties are selling. In Perth, homes are selling at a median rate of 12 days, according to CoreLogic. For context, the national median days on market was 33 in October.

5. Factors pushing people away from other markets

There are several reasons cities like Sydney and Melbourne have not appealed to buyers over the past year.

New land tax thresholds in New South Wales have meant more property owners are paying land tax and existing land taxpayers will progressively pay more.

Likewise, Melbourne’s investor market has taken a hit following the introduction of a new land tax regime. The tax, which took effect in January 2024, adds a flat-rate levy for property investors, alongside other taxes on landholdings.

The NSW government’s banning of at-will evictions may have disincentivised investors. The policy means landlords are unable to terminate leases, even for legitimate reasons.

Changes to tenancy laws in Victoria have also been labelled anti-investor, discouraging people from becoming landlords.

Buying in Perth

For these reasons, Perth stands out as a compelling option in Australia’s two-speed market. With its relative affordability, strong economic growth and increasing demand fuelled by population growth, Perth offers good value and potential for capital appreciation.

Interested in buying a property in Perth? As expert Perth buyer’s agents, Resolve Property Solutions can help. To discuss your options, book a free discovery call with a Resolve Property Solutions.