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The year’s strong property price growth has also translated into the number of new million dollar median suburbs leaping by 17.5 per cent.

Data released Monday (1 July) by Ray White Group also showed that this benchmark median property price had quadrupled to 857 suburbs since 2014.

The current real estate market strength is largely attributed to the mid-sized capitals of Perth, Adelaide and Brisbane, which have again dominated the capital growth stakes.

CoreLogic’s Research Director Tim Lawless said the market was defying a range of potentially suppressive factors.

“The national index has found a groove, with persistent growth coming despite an array of downside risks, including high rates, cost of living pressures, affordability challenges and tight credit policy.

“The housing market resilience comes back to tight supply levels, which are keeping upwards pressure on values.”

A shortage of homes for sale is overwhelming those variables.

The growth trends are reflected in advertised stock levels.

Over the four weeks ending June, the number of homes advertised for sale in Perth were 23 per cent lower than at same time last year and 47 per cent lower than the previous five year average. Adelaide (-43 per cent) and Brisbane (-34 per cent) are also recording real estate listings that are significantly below average for this time of year.

The two-speed nature of the market’s performance is best highlighted by the gulf between Perth and Melbourne.

As these PropTrack property price heat maps show, the former is recording growth of 12 to 26 per cent around the metropolitan area, compared to Melbourne’s uniformly flatlining market locked into a tight range at or close to zero.

The Ray White House Price Report, using independent Neoval data, found Perth’s house median increased 3.6 per cent monthly and 26.7 per cent over the past year. The median has landed at $821,093, which means properties in Perth went up $985.31 a day, over a 30-day month.

Regional markets have shown a similar trend to the capitals, with regional Western Australia leading the pace of capital gains with a 1.5 per cent rise in June and 16.6 per cent increase over the financial year.

Regional South Australia and Queensland have also recorded strong growth conditions, while regional Victorian dwelling values fell by half a percent over the year and regional Tasmania recorded a mild 0.7 per cent rise.

Queensland’s continued price explosion has led to first home buyers abandoning hopes of home ownership.

Antonia Mercorella, CEO, Real Estate Institute of Queensland, said the state has the lowest proportion of first home buyers in the country, and first home buyers make up less than one in five loans in the state.

“Relatively affordable price brackets are a magnet for owner occupiers and investors alike, and this broad popularity makes ‘bagging a bargain’ an unlikely scenario.

“Apartments have again forged ahead strongly, notably in the Greater Brisbane areas and relocation hotspots of the Gold and Sunshine Coasts, offering greater affordability, good locations and low-maintenance lifestyle compared to free-standing houses.

“The highest growth for apartments for the quarter was Logan (9.99 per cent) and similarly, Toowoomba apartments stood out in the regions (6.88 per cent) – both markets still sitting comfortably under the half-a-million sweet spot.

“In the housing market, the star performer over the quarter was Gladstone (6.59 per cent), followed by Toowoomba (6.55 per cent), Rockhampton (5.91 per cent) and Townsville (5.27 per cent) demonstrating the continued renaissance of the regions.”

More Property Price Hikes Expected

Eleanor Creagh, Senior Economist, PropTrack, said national home prices have cycled through 18 consecutive months of growth to hit a fresh peak in June despite the pace of growth slowing as winter begins.

“Although the number of homes hitting the market this year has lifted, strong population growth, tight rental markets and home equity gains continue to bolster demand,” she said.

“Meanwhile, building activity remains challenged, resulting in the chronic shortage of housing being exacerbated by a lack of new construction.

“Interest rate stability has sustained buyer and seller confidence, while the continuous rise in home prices is motivating many to overcome affordability challenges and transact with the expectation of further growth, and as a result, demand is outpacing supply, pushing prices and rents higher and offsetting the higher interest rate environment.

“From July, tax cuts will lift household incomes increasing borrowing capacities and buyers’ budgets, further supporting price growth.

Although home prices are expected to rise in the coming months, they will likely maintain a slower pace through the seasonally quieter winter period, particularly with increasing uncertainty around interest rates.”

Fitch Ratings has forecast nominal home prices to grow by 4 to 6 per cent in 2024 following likely growth of 9 per cent in 2023 from the trough in January 2023. More modest rises of 3 to 5 per cent will follow in 2025.

Analyst Timothy Groombridge said housing demand is high due to strong net migration and changes in household formation.

“Average household size has trended lower since the pandemic, leading to increased demand for housing.

“The low home listings seen in 2023 are expected to continue as homeowners are reluctant to sell due to fears of being unable to get a new mortgage assessed with high servicing buffers.

“New home construction has been decreasing as high inflation has resulted in increased building costs.

“Affordability constraints due to high home prices relative to income are expected to slow price rises in 2025.

“High interest rates for longer than our expectations may lead to home price movement below our forecast,” Mr Groombridge said.

With property prices showing little overall sign of slowing or retracting, the number of million dollar suburbs is set to rise further.

Atom Go Tian, Senior Data Analyst, Ray White Group, said of the six states and two territories, Queensland is the fastest growing with its count of $1 million suburbs growing by 25 times over the last decade from just seven to 174.

Most of these existing suburbs are in New South Wales, which has at least twice the number of million dollar suburbs as any other state at 358 suburbs as of 2024. Victoria comes in second with 176.

“Assuming the growth rate of the last decade maintains its trend for the next 12 months, we can expect around 99 new suburbs to pass the $1 million mark,” Mr Tian said.

“Thirty of these will come from New South Wales, 24 from Queensland, and 18 from Victoria, which means Queensland has a very high probability of overtaking Victoria as the state with the second most count of million dollar suburbs.”

The allure of renovations extends beyond mere property enhancement. It presents a strategic opportunity for investors to optimise cash flow through meticulous depreciation planning.

More than two-thirds of BMT’s depreciation schedules involving renovated or improved investment properties, generating valuable data revealing significant insights into the renovation sector.

While Division 43 capital works often harbour substantial depreciation deductions for the wear and tear on the property’s physical structure, Division 40 plant and equipment assets that are easily removable from a property also generate significant depreciation deductions.

These deductions are calculated over the effective lives of the assets as determined by the Australian Tax Office.

A decade’s worth of data has uncovered the most lucrative Division 40 plant and equipment assets to consider when renovating an investment property.

 

1. Floor Covering

Over the past decade, floor coverings like carpet, vinyl, linoleum and floating timber floors have contributed significantly to depreciation values during renovations, resulting in the combined depreciation deductions of $359,010,880 for clients.

Notably, among these floor coverings, floating timber floors have yielded the highest depreciation deductions for investors thus far.

 

2. Window Covering

Window coverings are essential for privacy, light control and energy efficiency in homes. They enhance interior design by adding texture, colour, and style.

Properly chosen coverings can also protect furniture and flooring from sun damage, contributing to the longevity of interior spaces while creating a comfortable and inviting environment.

Window coverings like blinds, curtains and shutters earned clients a combined $361,453,152 over the past ten years, with blinds being a clear frontrunner earning clients an incredible $281,421,691 in depreciation deductions.

 

3. Solar Powered Generating System

As electricity tariffs remain a persistent area of concern for many and with energy incentives prompting Australians to explore alternative household energy options, the popularity of solar-powered generators has surged.

This trend has also translated into excellent depreciation deductions for investors. Over the past decade, a remarkable $143,816,234 in depreciation deductions was earned through their investment in solar-powered generators.

 

4. Appliances 

Kitchen renovations typically rank among the top priorities in residential properties because they significantly impact property value and rental income.

A modern, functional kitchen attracts tenants and can justify higher rental rates.

Clients earned an impressive $322,025,715 in depreciation deductions from kitchen appliances alone over the past decade, reflecting the enduring value and importance of considering the appliances chosen when upgrading or renovating an investment property.

 

5. Furniture

Furniture emerged as the most unexpected and most valuable asset in terms of depreciation deductions, accruing an astonishing $556,537,552 in depreciation deductions over the past decade.

Each item listed in this data had diverse effective lives as specified by the Australian tax office, with a considerable number qualifying for instant asset write-off.

Before beginning renovations, it’s crucial to seek advice from a depreciation expert, highlighting the essential role that depreciation deductions play in making informed decisions about property renovations.

This proactive approach enables investors to align new Division 40 asset selections with their investment goals, whether prioritising immediate tax benefits or long-term returns.

The Australian Taxation Office this week revealed the country’s top 10 occupations by income and aspiring home owners might want to consider one of those careers if they want to keep up with the property market.

Real estate technology specialists Domain on Thursday (20 June) released property price forecasts for the coming 12 months, with 7 (and possibly 8) of the 11 regions nationally expected to hit record price levels.

The price boom is expected to pan out for house prices in the capital cities and regions, while units will hit record prices in the capitals.

For units and houses alike, only Canberra, Melbourne and regional Victoria are expected to deliver anaemic growth rates or even, in the case of the latter’s house prices, go backwards.

The predictions will come as sobering news to prospective home buyers, at a time when even existing home owners are struggling to keep up with mortgage payments. CoreLogic on Thursday revealed that home loan arrears reached 1.6 per cent in the March quarter, the highest such reading on mortgage arrears since Q1 2021.

On the house price front, Perth, Adelaide, Sydney, and Brisbane are expected to lead price gains, reaching new records. Sunshine Coast, Gold Coast, and regional Australian house prices are also anticipated to be at record highs.

By the end of financial year 2025 (FY25), house prices will surpass $1.7 million in Sydney, $800,000 in Perth, with both Brisbane and Adelaide likely joining the million-dollar club.

 

Sydney, Brisbane, and Adelaide are expected to lead price gains in the unit market.

Unit prices across Sydney, Brisbane, Adelaide, Perth, Gold Coast, Sunshine Coast, and regional areas will reach record highs if the forecasts are accurate.

While unit price growth is anticipated to slightly accelerate in Melbourne and Canberra, Sydney’s forecasted growth remains similar to the 2023 calendar year and FY24. Melbourne and Canberra are the only cities where unit price growth is expected to surpass that of houses.

 

Dr Nicola Powell, Domain’s Chief of Research and Economics, said Australia urgently needed more supply to balance the market and make it more affordable for Australians to own a home.

“While the continued increase in property values is good news for Australians that own a home, we have to acknowledge that it’s becoming increasingly harder for many Australians trying to get into the property market.”

She said the forecasts for continued growth, albeit slower than the pace of price gains over the past year or two, were driven by an array of demand drivers and government policies.

“We predict that population growth, construction challenges, and borrowing power will be the key drivers behind the price growth.

“Demand has risen as housing composition changes, and demographic shifts and robust population growth unfold.

“We have seen an increase in single-person households and a decrease in household size in general (fewer people, on average, living in each household), both amplifying housing demand, further compounded by migration.

“Home building has also struggled to keep up with population growth due to the scarcity of land, weak building approvals, and high construction costs, exacerbating the existing structural undersupply, which will lead to an ongoing limited supply of new homes on the market.”

Dr Powell added that additionally, as of 1 July, stage 3 tax cuts will mean more money hits Australian households, lifting borrowing capacity and, therefore, buying power across the country.

Property Market Not Without Its Restraints

While expectations are that property prices will continue to rise like bubbles in bathtub, there are those who see the waters ahead as being more tepid than hot.

Property listings are on the rise, with that added volume of properties for sale helping to ease price pressure.

The direct correlation between listings and price growth is clear. The more modestly performing property markets have seen listings rise sharply.

According to PropTrack, the ACT (+32.4 per cent), Melbourne (+24.7 per cent) and Sydney (+17.7 per cent) have seen the largest increase in total listings over the past year among capital cities, while in the boom markets of Perth (-23.4 per cent), Adelaide (-8.7 per cent) and Brisbane (-3.4 per cent) falls have been recorded.

Robert Baharian, Partner and Chief Market Strategist, Ekam Capital, said the property market remains vulnerable to higher interest rates and rising unemployment in the second half of 2024.

“We’re already seeing slowing growth in house prices in capital cities, primarily in Sydney and in Melbourne, as high levels of debt and the cost of living weigh on households,” Mr Baharian said.

“We believe property prices in Brisbane and Perth will continue to hold at relatively high levels given the relative value in those cities, with a growing pool and share of the investor market looking outside of Melbourne to buy property,” he said.

“As expected, the RBA kept rates on hold and we do not expect any rate hikes soon, as the central bank has held rates too long for that.

 

“The longer the Reserve Bank holds, the more the consumer will feel the impact and eventually we’ll see inflation come back down to the 2 to 3 per cent target as we are seeing in the US.

“We think rates might remain on hold at least to September, and possibly right through to April 2025 before the consumer sees any relief – we may have won the battle, but the war on inflation is not quite in the bag yet.”

Two-Speed Property Market Emerging

As listings and recent price data highlight, a growing divide is emerging between Melbourne, Sydney and the smaller cities of Canberra, Darwin and Hobart, and fast growing Adelaide, Perth and Brisbane.

Julie Kelley, Global Sales and Marketing Manager for aussieproperty.com, said a two-speed property market was rapidly asserting itself.

She said prices in Adelaide, Perth and Brisbane would continue to deliver stronger growth than other cities but also had a word of caution for investors venturing into those markets without doing their homework.

“It’s not just a case of stick a pin in the map and buy any property type in any suburb,” Ms Kelley said.

“Buyers in Perth and Brisbane should be wary of investing in areas where there is too much of the same stock.

“Too many apartments are being aimed at investors rather than home owners in it for the long term, and oversupply is reducing price competition for these dwellings.”

Ms Kelley identified some of the most susceptible areas for these issues as South Bank, Kangaroo Point and South Brisbane and, in Perth, inner areas such as the CBD, Burswood and East Perth.

Another, often overlooked, factor investors had to consider in the unit market was the often alarming rise of strata costs.

“We are seeing some crazy body corporate fees being applied, so buyers need to go over their contracts with a fine toothcomb, and check their strata disclosures and the 7-10 year maintenance plans, otherwise they could see their investment cash flow badly impacted,” Ms Kelley said.

Top 10 Wealthiest Suburbs Revealed

The past and forecast price rises are unlikely to trouble those living in the highest earning suburbs in the country.

The ATO this week listed the top 10 occupations by income and post codes in which they live.

Surgeons topped the list that was half filled with medical practitioners, while financial, legal, engineering and management positions dominated the latter half of the list.

Of the suburbs that were home to the highest paying earners, seven of the top 10 postcodes in the country were in NSW, with Sydney harbourside suburb Double Bay taking out top spot.

The average taxable income of residents living in this postcode (2028) during the 2021–22 financial year was $354,308.

WA and Victoria were the only other states to appear on the list, with the Perth suburbs of Cottesloe and Peppermint Grove included and Victoria’s Portsea and Toorak being that state’s top-earning suburbs.

The RBA continues to perform its balancing act of trying to contain inflation without causing an economic hard landing.

Given all 38 commentators in a Finder survey tipped a rate hold, the decision to retain the official cash rate at 4.35 per cent at its Tuesday (18 June) meeting comes as no surprise.

The RBA did, however, say it won’t tolerate high inflation indefinitely.

The recent falls in the inflation rate reversed last month, when it inched up and spooked borrowers hoping its continued decline would mean a rate cut was imminent.

But short of a major international economic shock that rattled the local economy, a rate cut now seems a distant prospect.

There have been 13 interest rate increases since May 2013 but the latest decision marks the fourth successive hold.

The holding pattern may run for some time yet, although the RBA made it clear that economic uncertainty could see it spring a surprise if that was necessary to contain inflation. Borrowers will have to wait until 6 August for the next RBA meeting.

Australians Spending Money They Don’t Have

In making its decision, the RBA indicated it is keen to see the positive of lower unemployment rates continue and mass job losses avoided, but with spending levels contained to ensure inflation fell to within its preferred band of 2 to 3 per cent.

There are worrying concerns that spending is continuing in the face of cost of living pressures and heightened levels of loan delinquency.

Worldpay’s Global Payments Report 2024 revealed buy now pay later (BNPL) use is at an all-time high in Australia – accounting for 15 per cent of eCommerce transaction value in 2023.

Almost half of experts who weighed in (44 per cent) say the current level of BNPL use is alarming.

Finder’s Consumer Sentiment Tracker shows two in five (42 per cent) Australians have used a BNPL service in the past six months.

Those who have used BNPL are carrying an average of $1,073 in debt, up from $916 in 2022.

Spending on property also appeared unlikely to be curtailed in the short term.

Helen Avis, Director of Finance, Specialist Mortgage, said rising property prices were unlikely to be stifled by the RBA.

“With the high migration there is not enough supply, while we have also seen an exodus from Sydney to regional NSW and Queensland that has applied price pressure to those markets.

“So despite the fact that rates are high we are still seeing people buying.

“I had a period earlier this year where my clients were ‘wait and see’, but recently they have had the confidence to buy.

“Some people have cut back on spending and adjusted their finances to manage the increased cost of their mortgages and also the cost of living, but overall clients seem to be coping with the current market conditions.”

RBA Keeps It Short And Sweet

In the RBA’s shortest Monetary Policy Decision in this reporter’s memory, inflation and economic uncertainty were its key themes.

“Inflation is easing but has been doing so more slowly than previously expected and it remains high,” the Board’s statement noted.

“The Board expects that it will be some time yet before inflation is sustainably in the target range (and) while recent data has been mixed, they have reinforced the need to remain vigilant to upside risks to inflation.

“The path of interest rates that will best ensure inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.”

On the economic front, the RBA suggested it could be a bumpy road ahead, noting that, “the economic outlook remains uncertain and … the process of returning inflation to target is unlikely to be smooth.”

 

Conceding that economic momentum was weak, savings rates and high spending were weighing more heavily than slow GDP growth, a rise in the unemployment rate to 4 per cent and slower-than-expected wages growth.

“There are uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages will respond to the slower growth in the economy at a time of excess demand, and while conditions in the labour market remain tight,” the RBA noted.

There also remains a high level of uncertainty about the overseas outlook.

“Output growth in most advanced economies appears to have troughed.

“There has been improvement in the outlook for the Chinese and US economies, and many commodity prices have picked up.

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

“Nevertheless, geopolitical uncertainties, including those related to the conflicts in the Middle East and Ukraine, remain elevated, which may have implications for supply chains.”

Where The Experts Expect Interest Rates To Head

The consensus among economists is that rate hikes are finished and the next move from the RBA will be a cut, but the timing is highly uncertain.

Financial markets, based on the ASX cash rate futures, have brought forward the timing of a rate cut from around mid-year 2025 to a fully priced in cut by March of next year. Meanwhile three of the big four banks’ economic units are forecasting a 25 basis point cut in November 2024.

Housing markets seem to be somewhat insulated from higher interest rates, with CoreLogic’s Home Value Index continuing to rise through June, and the combined capitals daily index already 0.4 per cent higher over the first 18 days of the month.

“The RBA made a point of calling out an increase in household wealth via higher housing prices which, together with a rise in disposable incomes, could support household spending,” Tim Lawless, Research Director at CoreLogic Asia Pacific, said.

“Similarly, the volume of home sales is tracking higher than a year ago and above the five-year average, demonstrating consistently strong demand from purchasers despite an array of headwinds including high interest rates, cost of living pressures, low sentiment and stretched affordability.”

The RBA had reason to be patient, according to Matthew Greenwood-Nimmo, Associate Professor of Economics, University of Melbourne.

 

“Although inflation is still stubbornly high, the RBA is likely to hold the cash rate constant in the near term.

“There are signs of weakness in the economy, and the full impact of past rate hikes is yet to be fully felt,” he said.

Jakob Madsen, Economics Professor at University of Western Australia, pointed to international conditions propping rates up for now.

“The US Federal Reserve fund rate is still more than 1 per cent point above the RBA cash rate and the increasing worldwide government debt-to-GDP ratio is keeping upward pressure on interest rates.”

There is no justification to reduce rates based on current economic data, according to Peter Boehm, Managing Director, Pathfinder Consulting.

“The pendulum is swinging towards an increase because of sticky inflation and a government fiscal policy that is likely to put upward pressures on inflation.

“Plus, I doubt there is a single Australian right now who is not suffering from sustained and ongoing price increases in such areas as utility/energy, health, food and just general living costs.

“By way of example, many charities cannot keep up with demand due to an increasing number of families struggling to put food on the table or cover essential living expenses.

“The possibility of another rate increase is on the cards and that will push many mortgage borrowers over the edge, and take many other Australians with them.”

Buying that first home is stressful enough as a life-changing commitment, so the added confusion around what the different states and territories offer by way of grants and stamp duty concessions only adds to the worries.

Queensland on Sunday (10 June) increased its stamp (transfer) duty threshold by $200,000 for first home buyers to $700,000. The concession then phases out up to values of $800,000.

The Steven Miles Labor Government estimated the changes would support around 10,000 buyers a year to buy their first home.

Foreign buyers will go some way towards offsetting the state’s lost revenue.

The Queensland Government has increased the foreign investor land tax surcharge to 3 per cent, which is closing in on New South Wales and Victoria who set their surcharges at 4 per cent. Transfer duty surcharge for foreign buyers is being brought into line with New South Wales and Victoria at 8 per cent.

State governments have become heavily reliant on the stamp duty fees (under whatever alternative name they prefer to apply to that tax).

In just Brisbane, for example, in the past four years the state government has collected $216 million in ‘transfer concessions’ applied to 17,660 first home buyer transactions in the state capital alone.

A further 76,241 homeowners had the transfer duty home concession applied to the purchase of their Brisbane home.

South Australia last week became the first state to completely abolish stamp duty for first home buyers.

For first home buyers, the financial burden is compounded by the uncertainty around what concessions and grants available to them.

To help first home buyers navigate the maze of offerings, API Magazine has compiled the following guide to what is on offer across the various jurisdictions.

New South Wales

A $10,000 First Home Owner Grant (FHOG) is available when you buy or build your first new home. The dwelling can be a house, townhouse, apartment, unit or similar that is newly built, purchased off-the-plan or substantially renovated.

For a newly built house, townhouse, apartment, unit or similar, the purchase price must not exceed $600,000.

If purchasing vacant land and signing a building contract with a builder then the government adds the value of the vacant land plus the value of the comprehensive home building contract plus the cost of any building variations done together. The total combined cost must not exceed $750,000.

The NSW Government also doesn’t charge first home buyers stamp duty on properties valued at up to $800,000, or vacant land valued at up to $350,000.

It offers discounted stamp duty for first time buyers purchasing properties worth between $800,000 and $1 million and land worth between $350,000 and $450,000.

Victoria

A FHOG of $10,000 is available for those buying their first home valued at up to $750,000.

Stamp duty is waived for principal properties of residence (PPR) valued up to $600,000, or a concession for a PPR with a dutiable value from $600,001 to $750,000.

Queensland

The first home owner grant was recently doubled and now gives eligible first-time home buyers $30,000 towards buying or building a new home in Queensland (but it’s only eligible until 30 June 2025).

As mentioned above, first home buyers now receive concessions on transfer duties for properties valued up to $700,000, up from the previous $500,000. The threshold for concessions will also rise on vacant land valued up to $350,000, from $250,000.

Western Australia

The WA Government last month changed first time buyer stamp duty property value thresholds for the first time since 2014.

As part of the 2024-25 State Budget, the Government increased the first home buyers transfer duty concession threshold for established homes from $530,000 to $600,000, and the exemption threshold from $430,000 to $450,000.

This means Western Australians buying their first home will pay no stamp duty on purchases up to $450,000 and will receive a concessional stamp duty rate on properties valued up to $600,000.

Eligible first home buyers can receive a $10,000 grant towards buying or building a new home, or a grant equal to the consideration paid to buy or build a house if less than that amount.

WA’s north and south are also treated differently. To receive the grant, those in the Perth metropolitan area must the limit the combined cost of land and building to below $750,000. North of the 26th parallel (from Shark Bay onwards) that value is $1 million.

South Australia

South Australia can lay claim to the friendliest environment for first home buyers looking for a helping hand.

June’s 2024-25 Budget abolished property value thresholds for both the stamp duty exemption and FHOG at a cost to the state of $30 million over four years.

With the abolition of property value limits, a first homebuyer who purchases a new dwelling broadly in line with the median house price of $750,000 will receive a benefit of over $50,000, including the First Home Owner Grant of $15,000.

The stamp duty exemption will be available to all first home buyers who buy a new home (including a house, flat, unit, townhouse or apartment), an off-the-plan apartment, a house and land package or vacant land to build a new home.

Tasmania

Liberal Party Premier Jeremy Rockliff on 26 May made good on an election promise by exempting first home buyers from stamp duty on properties valued at up to $750,000.

First home buyers might want to strike early though, as the exemption is expected to run until mid-2026 before being revoked or at least reviewed.

Eligible first home buyers in Tasmania can receive a $30,000 grant if they are purchasing or building a new home and unlike elsewhere in the country there is no price cap on the value.

Northern Territory

First home buyers in the Top End face a relatively harsh introduction to the property market.

While there is access to a $10,000 FHOG (known as the BuildBonus grant and Territory Home Owner Discount), stamp duty exemptions that were in place up to June 2021 are no longer available.

Australian Capital Territory

The ACT’s FHOG has been replaced by the new Home Buyer Concession Scheme.

First home buyers can save a maximum of $34,504 but the amounts vary according to the buyer’s income and family size.

 

For more detailed information, including the myriad terms and conditions that inevitably apply, buyers should check with their jurisdiction’s state or territory Revenue Office.

Any joy renters might have had that there had been a fractional improvement in vacancy rates around the country have been extinguished by rents still rising.

For home owners struggling to pay the mortgage, the picture is no brighter.

New research has shown that a worrying one in eight borrowers has missed one or more payment deadlines in the past six months.

An additional 32 per cent of borrowers who did pay on time told the Finder survey that they were worried a missed payment was looming as a scary possibility.

Renters have arguably been the hardest hit cohort of Australians as the cost of living and housing crises have become increasingly problematic.

In a glimmer of good news was PropTrack’s Thursday data showing the share of available rentals further increased in May, with the national rental vacancy rate up 0.08 percentage points (ppt) to 1.30 per cent.

 

This is the highest rental vacancy rate since July 2023, and the first instance of three successive monthly improvements since late-2020.

With overseas migration and student visa applications having peaked, the number of prospective tenants per rental property slightly easing, and more renters entering shared housing options to reduce costs, these factors combined could help to relieve some pressure on the rental market.

According to Rent.com.au statistics released Wednesday (5 June) there was a 7.1 per cent increase in the number of rental properties available nationally in May 2024.

All states and territories recorded increases in rental listing volumes, however, the vacancy rate in Darwin dropped 0.3 per cent to 1.1 per cent in May.

The very modest improvement in vacancy rates the remain chronically tight there was still a 1.7 per cent rise in rents nationally, from $600 to $610 per week. The highest increase in median house rent was recorded in Brisbane (+3.2 per cent; +$20 to $650) while the largest fall was in Canberra (-4.2 per cent; -$30 to $690).

The critical undersupply of current and new rental properties, along continued strong demand and rental price growth, means that it will still be tough going for renters and the rental market will remain extremely challenging for the rest of 2024.

Paul Ryan, Senior Economist, PropTrack, said that while any easing in conditions will be welcomed by renters, available properties remain very scarce with the vacancy rate at around half the levels seen before the pandemic.

“This means competition for rentals will remain strong and rents will continue to increase.

“The easing in conditions over the past three months has been most evident in Perth, Sydney and the ACT, with Perth seeing a substantial improvement after very tough conditions recently.

“While availability remains low across all markets, Adelaide and Brisbane remain the toughest for renters, with rental vacancy rates of 1.03 per cent and 1.11 per cent, respectively.

“We expect renters will face continued difficulty securing rentals and strong rent price growth over the rest of 2024 in these markets,” Mr Ryan said.

Borrowers Trying To Make Ends Meet

A worrying number of homeowners are struggling to keep up with their mortgage repayments, according to new research by Finder, Australia’s most visited comparison site.

A Finder survey of 1,071 respondents – 342 of whom have a mortgage – revealed 12 per cent have missed one or more repayments over the past six months.

That’s an estimated 396,000 borrowers who have fallen behind on their mortgage.

The research found 4 per cent of mortgage holders – 132,000 households – say they have missed one repayment.

A further 8 per cent of mortgage holders – 264,000 households – have missed more than one repayment.

The data revealed 3 per cent have had to ask for a repayment holiday or applied for hardship from their lender.

Richard Whitten, home loans expert at Finder, said mortgage defaults were a growing concern.

“Thousands of mortgage holders have weathered rate rises but are now experiencing extreme financial strain as savings and emergency funds run dry.

“Any further hikes would push many to breaking point.”

Shockingly, 1 in 3 borrowers (32 per cent) are worried they will miss a repayment due to mortgage stress. That’s over 1 million Australians at risk of delinquency.

Of those who missed a repayment, a third (33 per cent) said they ran out of money because of other bills, while 31 per cent said interest rates increased and they could no longer afford it.

Whitten said many Aussies are forking out a disproportionate amount of their income paying off their home loan.

“Interest rates rose so rapidly that mortgagors have reached breaking point with some unable to stay financially afloat.”

Variable rate loans remain the near-unanimous choice of borrowers, according to Helen Avis, Director, Specialist Mortgage.

Back in March 2020, at the start of the pandemic, 13.38 per cent of new borrowers were choosing fixed-rate loans and 86.62 per cent were choosing variable. But in March 2024, a staggering low of only 1.40 per cent of new loans were fixed, compared to 98.60 per cent variable, according to the Australian Bureau of Statistics.

“The reason so many borrowers are going variable right now is because of a widespread belief that interest rates are at or near their peak, which means variable borrowers would benefit from any future rate cuts.

“Conversely, in July 2021, when interest rates were at record-low levels, 46 per cent loans were fixed, while only 54 per cent were variable.”

Most Affordable Rental Markets

For those renters wondering where they can get an even break, they might want to head to the southern states.

When it comes to suburbs with listings under $500 per week, nowhere comes close to Melbourne.

According to data released by Ray White on Wednesday (5 June), Melbourne contains all ten of the top 10 list of suburbs with the most house rentals listed under that benchmark price.

 

 

The list is slightly more diverse for renters looking for units. Of the top 10 most affordable suburbs, half come from Melbourne, three come from Adelaide, while Hobart and Sydney offer one.

Atom Go Tian, Senior Data Analyst, Ray White Group, said the share of median asking rent versus weekly earnings was 40.5 per cent for houses and 38.4 per cent for units.

 

 

According to ABS, average weekly earnings as of November 2023 was $1,431 per week, a 35 per cent increase from 10 years ago. During the same period, rent has outpaced our growth in earnings with the median asking rent for houses growing by 56 per cent to $580 and the median asking rent for units growing by 52 per cent to $550.

Mr Tian said the balance between real income and rent costs has shifted dramatically, with the past two years having crunched renters.

“For the first eight years of the last decade, the share of rent versus earnings stayed relatively flat between 33 and 35 per cent.

“Weekly earnings growth even outpaced rent growth, with the share of rent reaching its lowest point in 2020 for houses at 32 per cent of weekly earnings and in 2021 for units at 31.4 per cent of weekly earnings.

“Since then, however, rent has skyrocketed.”

Meanwhile, on the rental supply front, the Property Council of Australia on Wednesday welcomed the introduction of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 as recognising the role of build-to-rent (BTR) housing in Australia but warned it does not create a level pathway to support 150,000 new BTR homes by 2034.

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