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Queensland and Perth’s outer suburbs dominate the list of suburbs in which Property investors are buying up property across the Australian states.

Queensland has multiple suburbs in Brisbane, Moreton Bay, Ipswich, Townsville, and Mackay showing significant investor activity. Key locations include Shailer Park, Jamboree Heights, and Bellbowrie in Brisbane, Albany Creek and Ferny Hills in Moreton Bay, and Wulkuraka and Newtown in Ipswich.

Western Australia also features prominently with suburbs like Connolly, Currambine, and Aubin Grove in Perth’s northern and southern regions.

New South Wales sees strong interest in suburbs such as Cranebrook in Penrith and Macquarie Hills in Lake Macquarie.

Median asking prices vary across the regions, reflecting local market conditions.

In Brisbane, prices range from $650,000 in Bellbowrie to nearly $1 million in Albany Creek. Perth suburbs show a median price range from $600,000 in Wattle Grove to $906,300 in Connolly. Sydney’s Cranebrook has a median price of $894,400.

Rental yields and median lease prices also vary, indicating diverse investment returns.

Areas like Shailer Park and Albany Creek offer substantial rental income, with median leases at $650 and $700 respectively.

This list underscores Queensland’s prominence in investor activity, with attractive yields and competitive asking prices across several hotspots.

New South Wales

Cranebrook (2749)

• Region: Sydney – Outer West and Blue Mountains
• Investor Activity: Moderate, with an index score of 4.6.
• Median Asking Price: $894,400
• Median Lease: $600 (up from $550 twelve months ago)
• Days on Market (DoM): Improved to 22 days from 25 days three months ago.
• Inventory Levels: Slight decrease, indicating a tighter market.
• Yield: 3.47 per cent
• Vacancy Rate: Steady at 0.85 per cent, indicating a strong rental demand.
• Rent Affordability: 28.46 per cent

Macquarie Hills (2285)

• Region: Newcastle and Lake Macquarie
• Investor Activity: High, with an index score of 4.7.
• Median Asking Price: $876,750
• Median Lease: $670 (up from $630 twelve months ago)
• Days on Market (DoM): Improved to 24 days from 27 days three months ago.
• Inventory Levels: Very tight, with a decrease to 0.77 months.
• Yield: 4.10 per cent
• Vacancy Rate: Stable at 1.15 per cent
• Rent Affordability: 29.90 per cent

Both suburbs in NSW are experiencing a strong investor interest, driven by their competitive asking prices and solid rental yields.

Cranebrook, with its improved days on market and steady vacancy rates, shows a robust property demand.

Meanwhile, Macquarie Hills stands out for its high investor activity and substantial rental yield, reflecting a very tight inventory and high demand in the area.

Both areas show rising median leases, pointing to a potential for increasing rental income. The investor interest in these suburbs is supported by solid yields and manageable rent affordability rates, making them attractive options for property investment.

Victoria

Watsonia (3087)

• Region: Melbourne – North East
• Investor Activity: High, with an index score of 4.6.
• Median Asking Price: $830,000
• Median Lease: $530 (up from $450 twelve months ago)
• Days on Market (DoM): Improved to 24 days from 25 days three months ago.
• Inventory Levels: Tight, with a decrease to 0.83 months.
• Yield: 3.07 per cent
• Vacancy Rate: Stable at 0.74 per cent
• Rent Affordability: 28.15 per cent

Victoria’s Watsonia suburb exhibits strong investor interest, underpinned by competitive asking prices and favourable rental yields. The median asking price stands at $830,000, reflecting the suburb’s appeal in Melbourne’s North East region. The median lease has risen to $530 from $450 a year ago, indicating robust rental demand.

Inventory levels are very tight at 0.83 months, showing a decrease and pointing to a competitive market environment. Days on market have slightly improved, now at 24 days compared to 25 days three months ago, demonstrating quick property turnover. Yield remains solid at 3.07 per cent, providing a good return on investment for property owners.

The vacancy rate in Watsonia is stable at 0.74 per cent, signifying a strong rental market with consistent demand. Rent affordability is reasonable at 28.15 per cent, making it a viable option for renters while still offering good returns for investors. Overall, Watsonia presents a compelling case for property investment, driven by its strong market fundamentals and attractive investment metrics.

Queensland

Shailer Park (4128)

• Region: Logan – Beaudesert
• Investor Activity: High, with an index score of 4.6.
• Median Asking Price: $990,000
• Median Lease: $650 (up from $600 twelve months ago)
• Days on Market (DoM): Improved to 24 days from 27 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.69 months.
• Yield: 3.41 per cent
• Vacancy Rate: Decreased to 0.87 per cent from 1.22 per cent
• Rent Affordability: 29.19 per cent

Jamboree Heights (4074)

• Region: Brisbane – West
• Investor Activity: Moderate, with an index score of 4.6.
• Median Asking Price: $877,000
• Median Lease: $585 (up from $550 twelve months ago)
• Days on Market (DoM): Improved to 22 days from 27 days three months ago.
• Inventory Levels: Tight, with a decrease to 1.07 months.
• Yield: 3.48 per cent
• Vacancy Rate: Increased to 1.09 per cent from 1.37 per cent
• Rent Affordability: 28.55 per cent

Bellbowrie (4070)

• Region: Brisbane – West
• Investor Activity: Moderate, with an index score of 4.6.
• Median Asking Price: $980,000
• Median Lease: $675 (up from $650 twelve months ago)
• Days on Market (DoM): Improved to 29 days from 30 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.30 months.
• Yield: 3.51 per cent
• Vacancy Rate: Increased to 1.27 per cent from 0.25 per cent
• Rent Affordability: 28.63 per cent

Albany Creek (4035)

• Region: Moreton Bay – South
• Investor Activity: High, with an index score of 4.6.
• Median Asking Price: $995,000
• Median Lease: $700 (up from $650 twelve months ago)
• Days on Market (DoM): Improved to 21 days from 24 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.23 months.
• Yield: 3.64 per cent
• Vacancy Rate: Decreased to 1.54 per cent from 0.86 per cent
• Rent Affordability: 30.88 per cent

Ferny Hills (4055)

• Region: Moreton Bay – South
• Investor Activity: High, with an index score of 4.7.
• Median Asking Price: $940,440
• Median Lease: $650 (up from $600 twelve months ago)
• Days on Market (DoM): Improved to 21 days from 24 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.50 months.
• Yield: 3.65 per cent
• Vacancy Rate: Increased to 1.32 per cent from 1.98 per cent
• Rent Affordability: 28.62 per cent

Wulkuraka (4305)

• Region: Ipswich
• Investor Activity: High, with an index score of 4.6.
• Median Asking Price: $599,000
• Median Lease: $450 (up from $440 twelve months ago)
• Days on Market (DoM): Improved to 26 days from 28 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.67 months.
• Yield: 3.80 per cent
• Vacancy Rate: Increased to 0.86 per cent from 1.11 per cent
• Rent Affordability: 29.22 per cent

Newtown (4305)

• Region: Ipswich
• Investor Activity: High, with an index score of 4.7.
• Median Asking Price: $639,000
• Median Lease: $500 (up from $450 twelve months ago)
• Days on Market (DoM): Improved to 28 days from 31 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.20 months.
• Yield: 4.02 per cent
• Vacancy Rate: Increased to 1.04 per cent from 0.93 per cent
• Rent Affordability: 28.52 per cent

Alice River (4817)

• Region: Townsville
• Investor Activity: High, with an index score of 4.6.
• Median Asking Price: $765,000
• Median Lease: $640 (up from $580 twelve months ago)
• Days on Market (DoM): Improved to 29 days from 34 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 2.34 months.
• Yield: 4.27 per cent
• Vacancy Rate: Increased to 1.22 per cent from 0.49 per cent
• Rent Affordability: 25.93 per cent

Queensland showcases a diverse range of suburbs with strong investor interest, particularly in the Brisbane, Moreton Bay, Ipswich, and Townsville regions. Suburbs like Shailer Park and Albany Creek offer high median asking prices, robust rental yields, and improving days on market, reflecting strong demand and limited supply.

Meanwhile, Ipswich suburbs such as Wulkuraka and Newtown provide affordable options with competitive yields and moderate rent affordability.

Overall, Queensland’s property market remains attractive for investors, with tight inventory levels and favourable rental conditions across various key suburbs.

South Australia

Athelstone (5076)

• Region: Adelaide – Central and Hills
• Investor Activity: High, with an index score of 4.6.
• Median Asking Price: $850,120
• Median Lease: $590 (up from $500 twelve months ago)
• Days on Market (DoM): Improved to 18 days from 20 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.75 months.
• Yield: 3.69 per cent
• Vacancy Rate: Increased to 1.50 per cent from 1.13 per cent
• Rent Affordability: 30.40 per cent

Hillbank (5112)

• Region: Adelaide – North
• Investor Activity: High, with an index score of 4.7.
• Median Asking Price: $633,440
• Median Lease: $550 (up from $495 twelve months ago)
• Days on Market (DoM): Improved to 28 days from 31 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.57 months.
• Yield: 4.40 per cent
• Vacancy Rate: Increased to 1.63 per cent from 1.22 per cent
• Rent Affordability: 30.34 per cent

South Australia’s suburbs of Athelstone and Hillbank are seeing robust investor activity, driven by attractive asking prices and solid rental yields.

The suburb has tight inventory levels at 1.75 months, improved days on market at 18 days, and a solid yield of 3.69 per cent. The vacancy rate has slightly increased to 1.50 per cent, indicating a stable rental demand.

Hillbank, in the Adelaide – North region, shows similar strong investor interest with a median asking price of $633,440 and a median lease of $550, up from $495 a year ago. Inventory levels are tight at 1.57 months, and days on market have improved to 28 days. Hillbank offers an impressive yield of 4.40 per cent, with the vacancy rate slightly increasing to 1.63 per cent, showing continued rental demand.

Both suburbs exhibit favourable investment conditions with competitive yields, improving market dynamics, and reasonable rent affordability, making them attractive options for property investors.

Western Australia

Connolly (6027)

• Region: Perth – North West
• Investor Activity: High, with an index score of 4.7.
• Median Asking Price: $906,300
• Median Lease: $700 (up from $590 twelve months ago)
• Days on Market (DoM): Improved to 30 days from 31 days three months ago.
• Inventory Levels: Very tight, with a decrease to 0.81 months.
• Yield: 3.91 per cent
• Vacancy Rate: Increased to 0.87 per cent from 2.39 per cent
• Rent Affordability: 30.38 per cent

Currambine (6028)

• Region: Perth – North West
• Investor Activity: High, with an index score of 4.7.
• Median Asking Price: $695,000
• Median Lease: $680 (up from $600 twelve months ago)
• Days on Market (DoM): Improved to 40 days from 44 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 2.02 months.
• Yield: 4.41 per cent
• Vacancy Rate: Increased to 0.35 per cent from 1.05 per cent
• Rent Affordability: 30.71 per cent

Aubin Grove (6164)

• Region: Perth – South West
• Investor Activity: High, with an index score of 4.9.
• Median Asking Price: $726,150
• Median Lease: $670 (up from $575 twelve months ago)
• Days on Market (DoM): Improved to 30 days from 32 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.10 months.
• Yield: 4.48 per cent
• Vacancy Rate: Increased to 1.03 per cent from 1.59 per cent
• Rent Affordability: 26.91 per cent

Kinross (6028)

• Region: Perth – North West
• Investor Activity: High, with an index score of 4.8.
• Median Asking Price: $745,180
• Median Lease: $690 (up from $620 twelve months ago)
• Days on Market (DoM): Improved to 40 days from 44 days three months ago.
• Inventory Levels: Tight, with a decrease to 1.12 months.
• Yield: 4.66 per cent
• Vacancy Rate: Stable at 0.35 per cent
• Rent Affordability: 30.82 per cent

Atwell (6164)

• Region: Perth – South West
• Investor Activity: High, with an index score of 4.9.
• Median Asking Price: $748,800
• Median Lease: $680 (up from $570 twelve months ago)
• Days on Market (DoM): Improved to 30 days from 32 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.10 months.
• Yield: 4.77 per cent
• Vacancy Rate: Increased to 1.03 per cent from 1.59 per cent
• Rent Affordability: 28.29 per cent

Wattle Grove (6107)

• Region: Perth – South East
• Investor Activity: High, with an index score of 4.8.
• Median Asking Price: $686,400
• Median Lease: $690 (up from $600 twelve months ago)
• Days on Market (DoM): Improved to 35 days from 40 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.52 months.
• Yield: 4.78 per cent
• Vacancy Rate: Stable at 0.88 per cent
• Rent Affordability: 29.03 per cent

Tapping (6065)

• Region: Perth – North West
• Investor Activity: High, with an index score of 4.8.
• Median Asking Price: $745,500
• Median Lease: $700 (up from $600 twelve months ago)
• Days on Market (DoM): Improved to 39 days from 43 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.15 months.
• Yield: 4.85 per cent
• Vacancy Rate: Decreased to 0.38 per cent from 0.57 per cent
• Rent Affordability: 29.67 per cent

Jane Brook (6056)

• Region: Perth – North East
• Investor Activity: High, with an index score of 4.7.
• Median Asking Price: $649,849
• Median Lease: $680 (up from $620 twelve months ago)
• Days on Market (DoM): Improved to 32 days from 33 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.81 months.
• Yield: 4.95 per cent
• Vacancy Rate: Stable at 0.00 per cent
• Rent Affordability: 28.92 per cent

Caversham (6055)

• Region: Perth – North East
• Investor Activity: High, with an index score of 4.6.
• Median Asking Price: $668,100
• Median Lease: $700 (up from $600 twelve months ago)
• Days on Market (DoM): Improved to 35 days from 36 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.32 months.
• Yield: 5.13 per cent
• Vacancy Rate: Increased to 2.00 per cent from 1.33 per cent
• Rent Affordability: 30.89 per cent

Wandi (6167)

• Region: Perth – South West
• Investor Activity: High, with an index score of 4.8.
• Median Asking Price: $578,950
• Median Lease: $650 (up from $550 twelve months ago)
• Days on Market (DoM): Improved to 33 days from 38 days three months ago.
• Inventory Levels: Tight, with a decrease to 2.48 months.
• Yield: 5.22 per cent
• Vacancy Rate: Stable at 1.12 per cent
• Rent Affordability: 27.39 per cent

Aveley (6069)

• Region: Perth – North East
• Investor Activity: High, with an index score of 4.8.
• Median Asking Price: $624,000
• Median Lease: $650 (up from $550 twelve months ago)
• Days on Market (DoM): Improved to 36 days from 38 days three months ago.
• Inventory Levels: Tight, with a slight decrease to 1.44 months.
• Yield: 5.37 per cent
• Vacancy Rate: Stable at 1.67 per cent
• Rent Affordability: 30.02 per cent

Western Australia presents numerous attractive suburbs for investors, particularly in the Perth metropolitan area.

Key suburbs like Connolly, Currambine, and Aubin Grove show strong investor interest, driven by competitive median asking prices and robust rental yields.

These suburbs have tight inventory levels, improving days on market, and low vacancy rates, indicating strong demand and limited supply.

Additionally, areas such as Kinross, Atwell, and Tapping offer favourable yields and stable rent affordability, making them appealing options for property investment. Overall, Western Australia’s property market displays promising investment opportunities with solid market fundamentals across multiple suburbs.

If you listen to the bond markets or Commonwealth Bank then there will be an interest rate cut by Christmas this year.

The other three big banks have revised their forecasts and pushed back expectations of a rate cut into 2025.

But the one voice that matters most is as adamant as her role permits that there will be no interest rate reprieve in 2024.

Michele Bullock, Governor, Reserve Bank of Australia, on Friday (16 August) did her best to quash expectations of an imminent downwards move for rates.

“Financial markets are still pricing in a rate cut by the end of the year,” Ms Bullock acknowledged.

“The Board’s message, though, was that it is premature to be thinking about rate cuts.

“Inflation is still too high and, in underlying terms, is not expected to be back in the top of the band until the end of next year.

“Circumstances may change, of course, and the outlook is uncertain but based on what the Board knows at present, it does not expect that it will be in a position to cut rates in the near term.”

With inflation unlikely to be where the RBA wants it until the end of 2025 – not 2024 – a rate hike would seem a more likely outcome than a rate cut in coming months.

Delivering the Opening Statement to the House of Representatives Standing Committee on Economics in Canberra, Ms Bullock sympathised with borrowers but made it clear swallowing bitter pills was sometimes the best medicine.

“I understand that this (lack of rate cut prospects) is not what many households want to hear.

“Those with mortgages are feeling the squeeze on their cash flows from the increase in interest rates over the past couple of years (and) businesses too are facing higher borrowing costs, but the alternative of higher inflation for longer is much worse.

“Inflation has not been this high for a few decades and I think many people have forgotten how bad it is – some younger people will not have experienced high inflation at all.

“There is a reason why there is so much talk about the cost of living – high inflation hurts everyone; it reduces what people can buy with their wages, erodes the value of savings, and it disproportionately hurts those on low or fixed incomes.

“This is why it is imperative we do what we need to do to ensure inflation returns to levels at which it is in the background again.”

2025 the likely year of the rate cut

Hotter-than-expected inflation data in June elevated expectations of an August RBA hike before July’s CPI figures deterred the rate hike bets.

The median forecast from economists surveyed by Bloomberg has predicted the RBA will lower the cash rate three times in 2025 to 3.6 per cent, with 0.25 percentage point rate cuts tipped for the first, second and third quarters of the calendar year.

For his part, the RBA’s Deputy Governor, Andrew Hauser, said in a speech to the Economic Society of Australia in Brisbane earlier this week that “false prophets” should not be claiming to know the future direction of markets and interest rates.

“Miss rates lie between 42 and 64 per cent,” he said.

“People are vastly too confident about what they truly know.

“Monetary policy works with long and variable lags, so our forecasts have to be medium term, not short term,” he said.

Despite the warnings around long-term predictions, interest rate relief in 2025 is still widely expected.

Bendigo Bank’s Chief Economist, David Robertson, is sticking with his long running forecast that Aussie borrowers will see some interest rate relief in 2025.

“Australians should expect the RBA to be in a position to cut rates next year, around six to nine months after other comparable central banks, such Canada, the US and New Zealand.

“The timing will be dependent on core inflation getting closer to 3 per cent, which we hope to see early next year.

“While conditions for households remain challenging due to persistent levels of inflation, real disposable income is forecast to improve next year.”

He added that Ms Bullock had “sensibly pushed back on the notion that the RBA could cut rates this year”.

The Commonwealth Bank is the only one of the big four banks to predict a rate cut in 2024. Westpac’s latest revision pushes the next expected cut to February 2025, with the current 4.35 per cent level sliding eventually to 3.35 per cent.

NAB has the RBA cutting rates in June 2025, while ANZ expects the first downwards movement to be in February.

Brian Martin, Head of G3 Economics, ANZ, said growth in Australia is forecast to pick up in the second half of 2024 and into 2025.

“Ongoing government consumption as well as business investment will support demand.

“ANZ Research expects the RBA to remain very focused on mitigating upside inflation risks, and anticipates only a modest 75-basis-point rate-cutting cycle in 2025.”

Repayments on a $1 million loan would decline by about $150 per month for each 0.25 percentage point interest rate cut.

Perth’s meteoric price rises have made asset millionaires of thousands of Perth property owners, with an unprecedented 30 suburbs joining the city’s million dollar club in the past year.

Highlighting the relatively sudden upwards jolt the market has experienced in the Western Australian capital, only two new suburbs joined the list in 2022-2023.

There are more than 350 suburbs in Perth, and 87 of them can now lay claim to a median house sale price of $1 million.

REIWA President Joe White on Thursday (15 August) said the record number of new entrants reflected Perth’s extremely strong price growth over the past 12 months.

“Under normal market conditions you can expect to see a few new suburbs join the million-club each year as their prices rise due to improved amenity or infrastructure, growing popularity for certain lifestyle features, or as a flow-on effect from price growth in neighbouring suburbs,” he said.

“However, this financial year house price growth in Perth has accelerated and the median house price has increased 18.8 per cent.

“The high demand for established homes, fuelled by population growth and limited new housing supply, has seen strong price growth across the metropolitan area, with nearly a quarter of the suburbs in the million-dollar club recording growth greater than the overall Perth market.”

Leading the charge among the chosen 87 was Karawara, which saw a 43.5 per cent in its median house sale price to $1,155,000.

Mr White said Karawara’s appeal lay in its proximity to the Canning River, city and Curtin University, which appealed to a wide range of buyers.

“The suburb is undergoing a transformation, with upgrades to Waterford Plaza offering residents two supermarkets and a range of new eateries,” he said.

“Properties have also undergone renovation and revitalisation in recent years, helping boost prices in the area.”

Peppermint Grove retained its place at the top of the million-dollar list with a median house sale price of $3,700,000 in the 12 months to June, followed by Cottesloe and Dalkeith at $3,500,000.

Plunging listings are separating Perth’s turbo-charged property market.

While listings are increasing in most of the country, Perth’s supply of homes for sale is tanking.

Canberra (+33.7 per cent), Melbourne (+21.7 per cent) and Sydney (+17.4 per cent) have seen the largest increase in total listings over the past year among capital cities, while Perth (-20.2 per cent), Adelaide (-6.9 per cent) and Darwin (-2.4 per cent) were the only capitals to record a fall.

Perth’s lack of stock is in marked contrast to Melbourne, where property prices are stagnant, and Sydney, which is growing modestly. Both of those more populous cities have seen new listings month by month for a year.

Nationally, capital cities have seen a 14.4 per cent rise in new listings year-on-year compared to a 7.9 per cent rise in regional markets, according to PropTrack.

Perth’s pace of property price growth is streaks ahead of the rest of the country, with 22.77 per cent year-on-year growth in July, while Adelaide was a distant second at 14.81 per cent, and Brisbane took bronze with 13.93 per cent growth.

Perth continues to experience faster growth in the most affordable suburbs.

List dominated by suburbs with wealthier neighbours 

Julie Kelley, Global Sales and Marketing Manager for aussieproperty.com, highlighted that the newly listed suburbs in the million-dollar club from inner-city and middle-ring areas are all “bridesmaid suburbs.” These neighbourhoods, adjacent to existing million-dollar suburbs, are gaining attention due to their appealing characteristics, including established infrastructure, proximity to the CBD and public transport, access to amenities, reputable school zones, and closeness to the ocean or river.

“Landed properties with potential for future renovation or subdivision in Willetton, Perth, and White Gum Valley have entered the million-dollar club,” Ms Kelley explained.

“This trend is largely driven by increased demand as population growth intensifies pressure on the limited supply coupled with relaxed zoning regulations.”

Ms Kelley further noted that in White Gum Valley, approximately half of the sales over the past six months have been for properties with development potential on 800sqm or larger blocks. The remaining sales have been for move-in ready family homes, offering a more affordable alternative to neighbouring areas such as East Fremantle, South Fremantle and Palmyra.”

South of the Swan River, suburbs new to the million-dollar list include Shelley, Alfred Cove, Coogee, Manning, and Melville. Their inclusion means that all waterfront suburbs from Shelley through to Coogee now have a median home price tag above $1 million, which Ms Kelley said wasn’t surprising.

“These southern middle-ring suburbs are also ‘bridesmaids,’ where the presence of high-performing school zones plays a significant role in driving up market prices.

“Families are fiercely competing to secure property in these highly sought-after areas, including Bull Creek, Willetton and Leeming,” Ms Kelley said.

She also pointed out that the outer suburbs, such as Oakford and Gooseberry Hill, which have recently joined the million-dollar club, are primarily being purchased by families.

“These areas offer beautiful, expansive homes on large blocks further from the city.

“While they may lack the same level of local amenities, these properties compensate with their grandeur and size,” she added.

Could the market have reached a peak?

Investors are also jumping on board the property juggernaut in the west.

Data from Money.com.au reveals that investor loans in Western Australia have surged 37 per cent over the past year—over three times the national average increase of 11 per cent.

The investor boom in WA has been fuelled by the influx of interstate investors snapping up property in Perth, where house prices have increased by 23.8 per cent year-on-year

Peter Drennan, Money.com.au’s Research and Data Expert, said Australia is seeing a boom in investor activity — investor loans now account for 38 per cent of new loans issued. That’s up from just 22 per cent seen at the lows of 2020.

“WA is the golden goose, with the number of investor loans in the state rising by 37 per cent annually.

“This investor interest is powered by five key factors: the state’s growing population, increasing property values, strong rental demand, low vacancy rates, and the resources boom in the region,” he said.

The company’s Home Loans Expert, Mansour Soltani, warned that the housing market in WA may have reached its peak, with a lack of supply now driving investors to Victoria and South Australia, where supply is more readily available and property prices remain relatively attractive compared to other states.

“WA has seen solid growth in investor lending in the last five years, but property prices in the state are now higher than investors may be willing to pay.

“It’s an inflated market and the bubble will eventually burst,”  he said.

Share markets are undergoing a rollercoaster ride and many economists believe a recession is imminent, with experts estimating a 65 per cent chance of it occurring within the next 12 months.

A mind-numbing $6.4 trillion has been wiped off global stocks in three weeks.

But even if those losses are compounded, is it likely to flow through to a property retraction or crash?

During Australia’s last major recession, back in 1990-91, property prices fell in some parts of the country. Melbourne real estate slipped 6 per cent but the country’s property pool overall proved exceptionally resilient.

Given that recession was one of the worst since the Great Depression of the early 1930s, this was quite an achievement.

Melbourne’s property prices fell and didn’t recover to 1989 levels until 1996 but its outlying poor performance came off the back of a heady 1980s boom and was seen as an inevitable correction.

Borrowers despairing at the current interest rate level would be suffering paroxysms if they were faced with the insanely high 17.5 per cent repayments confronting mortgagees back then. It was the relatively quick decline of those rates that underpinned much of the resilience of property prices through those economically challenging times.

Recessions creep up on property owners and prospective investors but how has Australia handled the sudden impact of stock market crashes that hit like a car crash?

The Global Financial Crisis of 2008-09 was a harrowing experience for those with superannuation, share portfolios and careers in finance and elsewhere.

But once again, property prices barely registered an interest in the events that caused tremors around the world. Australia in general was less impacted than the rest of the world but shares still dropped more than 10 per cent and the Aussie dollar lost 30 per cent of its value.

Property? There was minor blip in 2009 before dwelling values resumed their upwards trajectory.

“In large part this reflected the health of the Australian banking system,” the report noted.

“The Australian banks had almost no holdings of the ‘toxic’ securities that severely affected other global banks.

“The health of the Australian banking system facilitated the effectiveness of the monetary and fiscal response, particularly by allowing much of the large easing in monetary policy to be passed through to interest rates on loans to households and businesses, in stark contrast to the outcome in other developed economies.”

The 2024 Financial Landscape

Share markets around the world have been on a tearaway run to record levels around the world in the years since the pandemic.

Before this week’s burst of volatility, when Japan’s Nikkei Index lost 12.4 per cent of its value in a day before adding another 10 per cent the next day, and the US and Europe markets contracted very sharply, it was all buy, buy, buy.

From New York to London and Tokyo, 14 of the world’s 20 biggest stock markets had hit record highs in the past couple of months.

In the US, from where many international financial contagions have emanated, analysts had been pointing to a strong economy, moderating inflation, robust corporate profits, and trust in the Federal Reserve to buoy investor confidence and help stocks rise. However, they warned that trouble could be around the corner if any of those factors were to fall out of balance.

That factor has emerged as unemployment.

Last week’s US jobs data shocked on the downside, sparking fears of a slowdown across the world’s largest economy.

Whether this result’s impact on stock markets has just contributed to a ‘healthy correction’ or is the harbinger of more turmoil to come will be known in coming months.

Potentially expanded Middle East conflict, or even the same eventuality beyond Ukraine and deeper into Europe, China’s slowing economy and unpredictable regional sabre rattling, and the potential for a global herd reaction if another large equity sell-off was to take place could all throw a major spanner into the international economy’s often-opaque inner workings.

But as Covid proved, when Australian property was seen as a safe haven in an uncertain world, even the complete freezing of global supply chains was not enough to pull the real estate market down.

There’s little reason to believe Australian property would be too adversely affected unless an international conflict became a truly global conflagration.

When property prices did last fall in Australia, during 2017–18, it was matters closer to home that were the driver. There was no economic crisis, and property prices had been rising steadily in the years before.

Low interest rates and loose lending policy have always driven price growth more than almost any other factor.

In 2017 and 2018 low interest rates had everyone borrowing whatever they could get their hands on.

In response, lenders became very strict and APRA came down with some very hard-hitting policy changes as a result of the Financial Services Royal Commission.

When people could no longer throw wheelbarrows of money at property, prices retreated.

For now, the likelihood of property market crash is fairly remote.

Even if there is a massive stock market crash, property responds slowly to such volatile scenarios and with the current low rate of loan delinquencies few sellers would be forced to offload property and therefore add supply to the market that might lower prices.

The current imbalance between housing supply and demand that has driven prices to record levels around the country are not being addressed, population growth is still high even if migration levels are being reduced, and interest rates have stabilised.

With those parameters in play, even if stock market tremors become a fully-fledged quake property prices are unlikely to have their foundations shaken.

Stubbornly high inflation has not been quite threatening enough to force the RBA’s hand.

The official cash rate was kept on hold at 4.35 per cent at the Reserve Bank’s Tuesday (6 August) meeting but Reserve Bank Governor Michele Bullock has all but ruled out a rate cut this year.

The RBA Board noted that the economic outlook is uncertain and recent data demonstrated that the process of returning inflation to target has been “slow and bumpy”.

While the hold decision had been expected by all four big banks and about 80 per cent of economists, the tone of the announcement suggested a hike could still be imminent.

“Inflation in underlying terms remains too high, and the latest projections show that it will be some time yet before inflation is sustainably in the target range,” The RBA’s minutes noted.

“Data has reinforced the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out.

“Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range.”

The quarterly rate of core inflation eased back to 0.8 per cent in the June quarter, in line with the RBA’s May forecast and down from 1.0 per cent in the March quarter, taking much of the pressure off the RBA to lift rates.

A slowdown in job growth, a subtle lift in the unemployment rate and concerns about international economies were also at play in keeping rates on hold.

“Momentum in economic activity has been weak, as evidenced by slow growth in GDP, a rise in the unemployment rate and reports that many businesses are under pressure and there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market.”

The RBA noted that there also remains a high level of uncertainty about the overseas situation.

“The outlook for the Chinese economy has softened and this has been reflected in commodity prices.

“Some central banks have eased policy, although they remain alert to the risk of persistent inflation.

“Globally, financial markets have been volatile of late and the Australian dollar has depreciated (while) geopolitical uncertainties remain elevated, which may have implications for supply chains.”

What Will The RBA’s Next Move Be?

Graham Cooke, head of consumer research at Finder, said mortgagors were now anxiously waiting for a cash rate cut.

“Millions of Aussie borrowers are experiencing significant mortgage stress due to the fact that their monthly repayments have blown out so much and so rapidly.

“They’re waiting with bated breath for any sign of relief from the RBA.

“The good news is our experts say there’s a 56 per cent chance of a rate cut in the next 12 months; the bad news is 1 in 3 say we will see a rate rise,” Cooke said.

Dr Nalini Prasad of UNSW Sydney, and who has previously worked at the RBA, said the pressure to raise rates would exceed any desire to lower them.

“The latest release of data shows that inflation remains higher than target and I think the RBA will want to increase interest rates to try and bring down inflation rather than risk not doing anything and seeing inflation rise in the future.”

A conflicting view came from Jeffrey Sheen, Professor of Economics, Macquarie University, who said weak economic data would be weighing on the collective minds of the RBA economists.

“Economic growth remains weak, and it will take more time for inflation to finally reach the RBA’s target range.

“There is no need for a change in the cash rate at the moment but by November, I expect the RBA to be ready to cut.”

Associate Professor Evgenia Dechter, School of Economics, UNSW Business School, told API Magazine that there was still the likelihood of a cut this year.

“If the ongoing slowdown in economic activity in Australia persists, it is likely that the RBA’s next move on the cash rate will be a cut rather than an increase.

“If the current trajectory continues, the RBA might lower the cash rate around December or early next year.”

Two thirds who weighed in on Finder’s surveying believe mortgage holders are shouldering too much of the burden from the RBA’s attempt to curb inflation.

Shane Oliver, Chief Economist and Head of Investment Strategy, AMP, agreed that mortgage holders were bearing too much of the brunt.

“Tighter fiscal policy in the form of tax hikes and spending cuts or maybe a 1 per cent super levy on everyone would better spread the burden.

“But that would mean politicians would have to do things that are politically unpopular and history shows that they cannot be relied upon to do that.

“So responsibility for controlling inflation should remain with the RBA and that unfortunately means the burden remains on mortgage holders.

“Of course it’s worth recalling that existing mortgage holders were big beneficiaries of falling interest rates in the 1990s, 2000s and 2010s,” Mr Oliver said.

First Home Buyers’ Changing Habits

The RBA’s hold decision comes amid pressures on stock markets, increasing concerns about the direction of the global economy and the pricing of potential risks of rising conflict in the Middle East.

Fewer job vacancies and more applicants per job in Australia are increasing concerns that unemployment figures could soon follow.

In line with this economic uncertainty, new research from Mozo has revealed a dramatic shift in first home buyer behaviour.

Mozo analysis of the latest first home buyer lending data reveals the number of first home buyers opting for investment loans has grown by 25 since the Australian Bureau of Statistics (ABS) started publishing the data in July 2019.

Rachel Wastell, Mozo’s personal finance expert, said the RBA’s decision to maintain the cash rate reflects ongoing caution in a volatile economic environment, but it does little to ease the strain on first home buyers.

“While there’s no immediate increase in borrowing costs to new buyers like there are with mortgage holders, the ongoing high rate environment is having a significant impact on purchasing decisions.

“High rates and skyrocketing property prices mean first home buyers are finding homeownership increasingly out of reach, so many are turning to rentvesting as an alternative.”

While some investors have taken a back seat amid rising interest rates, overly competitive markets and high inflation, other investors are jumping straight in on sub $250,000 investments.

Interestingly, you can still invest around Western Australia and beyond with a smaller budget and end up with a prime location – not just a regional bush block with a knock over shack.

Buying residential property under $250,000 anywhere in Perth is mostly limited to one-bedroom or studio units within the greater metro area.

The serviced apartment sector is a great pick up for the right investor looking to achieve a consistent and higher rental return for a residential asset.

Strictly for investment purposes and with no opportunity to ever live in the property, serviced apartments are a market sector all to their own that form part of a larger hotel letting pool.

The buyer receives a fixed return on their investment while the hotel group use the property for short term accommodation.

They are a specialised asset class that can represent value buying in Perth under the $250,000 threshold. Some of the properties available present an excellent buying opportunity, especially for those on a tighter budget.

A serviced apartment right at the doorstep of the convention centre is just $220,000.

Located close to the Swan River, this apartment offers a 7 per cent net return but is strictly for investors.

Similarly in Adelaide, investors can purchase an office in the CBD for $200,000.

This prestigious address office comes with ample common facilities, such as a rooftop recreational area, lap pool and gymnasium.

It may be a great commercial investment but buyers need to be aware that if it is vacant when they buy it, they have to pay 10 per cent on top of the purchase price for GST.

Melbourne CBD To Regional Queensland

Often, lucrative investment opportunities such as this apartment in Perth and office in Adelaide come with a catch – not suitable for the novice investor.

Property prices in Perth and Adelaide are generally lower than other major cities in Australia, but it is important to note that they have grown significantly over the past two years, pricing many first home buyers and investors out of the market.

Other investments sub-$250,000 include a small CBD studio in Victoria, old shack on a big block in regional Queensland or a single car space in the Sydney CBD.

With a budget of $210,000, you can purchase a tiny studio on Collins Street in the Melbourne CBD.

This tends to be the size of a single garage but some banks won’t lend on property this small, so it is advised to do your research with the bank before you buy.

For investors with an appetite for ‘fixing up’, regional Queensland could meet your criteria. In Mount Isa, investors can purchase a piece of real estate with a three-bedroom house on it for $189,000.

In fact, it includes more than 1,000sqm of land with a small shack and double garage but don’t forget to budget for a little TLC for these style investments, as they will require a bit of work to get them up to liveable condition.

Ambitions in in this budget in Sydney are somewhat humbler.

The median house price in Sydney is currently, $1,174,867, but with $150,000, investors can seek a CBD parking space less than 300 metres from Town Hall Station. Just don’t expect it to be furnished.

A shortage of properties on the market is fuelling the fast-track capitals, while real estate prices in three cities trapped in the slow land have gone backwards.

Melbourne, Hobart and Darwin are back in the red, slipping 0.4, 0.5 and 0.2 per cent respectively, according to the July Home Value Index (HVI) published by CoreLogic.

This was in stark contrast to three usual suspects, Perth, Adelaide and Brisbane. These red hot property markets continued their double digit annual trajectory with monthly gains of 2.0, 1.8 and 1.1 per cent respectively.

These mid-sized capitals are continuing to buck the overall national slowing trend.

Quarterly pace of growth in Perth is tracking at 6.2 per cent, while growth in Adelaide accelerated to 5.0 per cent, the fastest rolling quarterly pace of growth since May 2022. Brisbane values rose at a quarterly pace of 3.8 per cent, though this is down from a 4.7 per cent increase seen this time last year.

National home values rose 0.5 per cent in July, the 18th consecutive monthly increase in home values nationally – a figure on par with the 0.5 per cent increase recorded in June. Following a 7.5 per cent decline recorded between May 22 and Jan 23, the national HVI has gained 13.5 per cent and values have consistently pushed to new record highs since November last year.

Tim Lawless, Research Director, CoreLogic’s, said available supply is a key factor explaining the diverse outcomes in housing growth trends.

“The number of homes for sale in Brisbane, Adelaide and Perth is more than 30 per cent below average for this time of the year, while weaker markets like Melbourne and Hobart are recording advertised supply well above average levels,” Mr Lawless noted.

Perth property prices are now a remarkable 24.7 per above a year ago, with its median dwelling price of $773,335 on track to soon overtake Adelaide’s $776,597. Both cities could also soon join Brisbane in overtaking Melbourne’s $781,949.

Monthly property price data also released on Thursday (1 August) by PropTrack, showed Sydney’s unspectacular but steady price ascent had extended record prices there. Prices are now up 6.1 per cent over the past year and 4.8 per cent higher than the peak recorded during the pandemic.

Paul Ryan, PropTrack’s Senior Economist, said national home price growth persisted in July, albeit at a slower pace given the seasonally quieter time of the year.

“Strong housing demand pushed prices higher, despite more homes being listed in what is a higher interest rate environment.

Slow construction activity, above-average income growth and July’s tax cuts are clearly contributing.

“Further home price growth is expected over the coming months as the market moves into the traditionally busier spring selling season, however, the pace of price growth is likely to remain modest as uncertainty about the path of interest rates and affordability challenges constrain buyers’ budgets.”

Interest Rate Implications

Housing is now the biggest contributor to annual inflation, a situation that could prove self-perpetuating if the Reserve Bank raised interest rates in response to this higher inflation.

The pace of rental growth is easing but still rising at a time when renters are wrestling with myriad cost of living issues.

CoreLogic’s hedonic rental index was only 0.1 per cent higher in July, the smallest monthly rise since August 2020.

A clear slowdown in the pace of rental growth across the unit sector has been the main drag on rental growth, especially in Sydney where the annual change in unit rents has dropped from 17.9 per cent in May last year to 6.6 per cent.

Melbourne and Brisbane unit rents have also lost more than 8 percentage points in the annual growth rate. The slowdown in unit sector rental growth is off a high base.

Despite the slower rate of annual growth, Sydney unit rents still rose by 6.6 per cent over the past 12 months, which is more than double the pre-Covid decade average (2.7 per cent annual growth) and well above the nation’s inflation rate, which on Wednesday (30 July) accelerated to 3.8 per cent. Housing inflation rose even higher, to 5.5 per cent.

Real Estate Buyers Agents Association of Australia (REBAA) President Melinda Jennison said the slowdown in property price growth this past month could be at least partly attributed to the interest rate situation.

“Across the country, the more affordable end of the market continues to outperform the higher-priced properties in terms of price growth, aligning with the trend of stronger monthly growth in the unit market compared to the house market,” Ms Jennison said.

“Nationally, property values are still on the rise month-on-month, though the rate of growth is easing.

“This slowdown may be attributed to persistent inflation, delays in anticipated interest rate cuts and concerns that rates may stay higher for longer.

“Additionally, cost-of-living pressures continue to tighten household budgets.”

Homeloanexperts.com.au CEO Alan Hemmings has predicted the RBA will hold the cash rate target steady at 4.35 per cent next week. This was after CPI data showed inflation was up 1 per cent for the quarter to June and 3.8 per cent for the year to June.

“The RBA board is in a difficult position; the largest driver of inflation was housing costs, raising rates would only increase these costs,” Mr Hemmings said.

“When you look at trimmed mean inflation (which removes the bottom and top 15 costs) inflation actually came down to 3.9 per cent, from 4 per cent and most economists were forecasting that if this was the outcome it would allow the RBA to hold.”

Hope For Building Sector

One area in which inflation is easing is with building costs.

Beyond the number of homes available to purchase, the supply of newly built homes remains insufficient relative to population growth.

A further 6.5 per cent drop in dwelling approvals through June highlights the challenges faced by the residential construction sector.

Profit margins have been compressed, skilled trades are scarce and holding costs remain high.

“On the positive side, we are now seeing residential construction costs rising at the slowest annual pace in 22 years,” Mr Lawless said.

“Although the cost to build isn’t reducing, the slower pace of growth should provide builders some confidence that project costs won’t blow out.

“Additionally, with established housing values rising almost three and half times faster than construction costs, profit margins should gradually repair.”

Investors are continuing their momentum-gathering return to the property market, outpacing the growth of owner-occupiers and first home buyers.

Over the last year, property investors have ignored higher interest rates, with the annual growth in the value of investor home loans rising 30 per cent in June from a year earlier.

Australian Bureau of Statistics (ABS) data released Friday (2 August) revealed that the value of new owner-occupier loans grew by 0.5 per cent to $18.2 billion in June, while the value of new investor loans jumped a hefty 2.7 to $11.0 billion during the month.

Over the year, the value of new investor loans surged 30.2 per cent, more than double that of owner-occupier loan values, which rose 13.2 per cent, The value of loans to first home buyers rose just 3.4 per cent from a year earlier.

Simon Arraj, founder and director of private credit investment manager Vado Private, said first home buyers were being priced out of the market but investors chasing capital growth were largely undeterred.

“Notwithstanding this, house prices could consolidate from their record levels, as the Australian economy slows and higher rates feed through the economy.”

Interest Rates No Barrier

Over the last 12 months, the national average has risen by $56,357, an increase of $154 a day, despite the fact the cash rate is at its highest level since November 2011.

The average new owner-occupier mortgage in Australia is now $636,597 – a new record high that is set to keep on rising alongside property prices in key states.

New South Wales is leading the nation in terms of loan sizes. Over the past 12 months, NSW continued to have the highest average loan sizes for both owner-occupiers and investors. In June, it rose to $780,000 for owner-occupiers and $818,000 for investors, compared to $636,600 across Australia, $604,300 in Victoria, Queensland’s $599,300, $545,800 in SA, $566,700 in WA and $467,500 in Tasmania.

RateCity.com.au’s Research Director, Sally Tindall, said the average new owner-occupier loan size has just hit another record high, as property prices in key capital cities continue to soar.

“Across the country, the average new owner-occupier mortgage has risen by $154 a day over the last 12 months, and on a 30-year mortgage you can basically double that figure when adding in interest costs,” she said.

“In Western Australia, the average new mortgage for an owner-occupier is now almost $100,000 more than it was just 12 months ago – rising by a gobsmacking $257 a day.

“It’s incredible to think this has unfolded under the weight of a rising cash rate.

“While there is seemingly no shortage of buyers prepared to up their bids at heated auctions in key capital cities, many would-be first home buyers have their hands tied by the double whammy of rising rates and property prices.”

The number of owner-occupier first home buyer mortgages, meanwhile, is stuck in neutral, clocking in at just 9,947 in the month of June.

“This figure has managed to lift above the 10,000 mark just once since the start of the rate hikes – a far cry from the most recent peak in first home buyer numbers recorded back in January 2021 when over 17,000 first home buyer mortgages were written for owner-occupiers,” Ms Tindall said.

The proportion of new and refinanced loans opting for a fixed rate clocked in at 2.6 per cent in the month of June. While this is just a fraction of what it was at the peak in July 2021, when 46 per cent of new and refinanced loans chose to go with a fixed rate, it is the highest level of fixing since September of last year.

Reflecting Australians’ love affair with property, recent data from the ABS reveals that household net wealth was a record $16.2 trillion in the March 2024 quarter, boosted by a record level of property assets of $11.0 trillion. As a proportion of household wealth, residential property comprises 67.9 per cent, up from 61.7 per cent in December 2020.

The key driver of household wealth gains in recent years has been rising property prices.

Housing Industry Association Economist, Maurice Tapang, the number of loans issued for the purchase and construction of a new home has been steadily increasing since the start of 2024, from a very low base.

“Market confidence appears to be stabilising following nine months without a change in interest rates.”

The number of loans issued for the purchase or construction of a new home increased by 9.2 per cent in the June quarter 2024 compared to the previous quarter.

“This quarterly increase was broad-based, with all states recording more loans issued for new homes in the June quarter 2024 than in the March quarter.

“This increase in lending is partially driven by a return of first home buyers to the market.

“The number of loans issued to first-home buyers in the June quarter 2024 was 5.8 per cent higher compared to the March quarter, which suggests building activity is at, or near, the trough in this cycle.”