4 megatrends shaping Australia’s real estate market right now

May 31, 2024

Shifting confidence levels, taxes and interest rates are shaping Australia’s diverse real estate landscape, as home buyers and sellers continue to navigate unpredictable times.

Home buyers are facing uncertain market conditions across the country, as home prices continue to rise despite the higher interest rate environment.

On the sidelines of the Australasian Real Estate Conference (AREC) held on the Gold Coast earlier this week, some of Australia’s leading agents shared their thoughts on the issues influencing market conditions in 2024 with realestate.com.au.

Property tax pain

Property-related taxes have influenced markets such as Victoria, where looming land tax hikes set to begin next financial year have been prompting landlords to sell rental homes.

Gary Johns from Hodges Real Estate in Melbourne said the state’s rental market had been hit hardest by the coming changes, with landlords selling rental homes to avoid the extra taxes.

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More than 4,000 real estate professionals attended AREC on the Gold Coast this year. Picture: AREC


Mr Johns said the combination of increased lending costs, higher living costs and the expanded land taxes was just too much for some investors.

“One in four sales last year were land tax-related,” he said.

“For every investor or landlord we’re losing, we’re not replacing them because who in their right mind would buy at the moment.

“It’s putting a lot of pressure on rentals, so I can see rents continuing to rise.”

Premium properties attract buyers

Real estate agents have seen home buyers flock to A-grade properties situated in the right locations that were ready to move into.

Andrew Liddell from BresicWhitney in Sydney said a lot of the premium homes for sale were performing very well.

“If you’re the vendor of an A-grade property, you should feel very confident,” he said.

“B- and C-grade are probably a bit more sensitive and therefore pricing… is becoming such an important part of the process.

Andrew Liddell

Andrew Liddell from BresicWhitney said A-grade homes have been popular. Picture: BresicWhitney


“If you get the pricing wrong, buyers will react, but if you get it right then you’ll be ok.”

Melbourne-based Aaron Zhao from Fletchers was seeing similar conditions in his market, with buyers showing the most interest in well-located properties.

“Luxury properties are still selling really well, but everything needs to be ready,” he said.

Shifting buyer confidence

Home buyers are back in the market and looking to buy, agents say, but they are approaching the market carefully and taking their time.

Michael Bacon from Place Estate Agents in Brisbane said home buyers weren’t rushing into the market as they previously were.

“Buyers are just taking longer to make decisions at the moment,” he said.

David Mills

McGrath’s David Mills said recent interest rate hike speculation had impacted buyers. Picture: Realestate.com.au


Mr Liddell said home buyers were willing to participate, but they were more value driven.

“Speaking to my market, I don’t think we’re in a market where buyers feel the desire to get into the market at any cost,” he said.

“There’s certainly plenty of willing buyers but it’s price sensitive and property dependent.”

Rolling interest rate impact

Interest rates have dominated real estate markets nationally since rates started to rise in May 2022, with home buyers and sellers watching interest rate decisions intensely.

Interest rates were cited time and time again by the real estate agents attending the conference as a major force impacting people in the market.

David Mills from McGrath said they were seeing fewer bidders at auctions over the past couple of weeks due to recent speculation that interest rates may rise.

Aaron Zhao 1

Aaron Zhao of Fletchers said buyers were prioritising well-located homes in his market. Picture: Fletchers


McGrath’s Bill Johnstone said he saw real estate enquiries dry up around the time of the recent interest rate hike chatter as well.

Fellow McGrath agent Vicki Lamb said buyers were being more conservative than they had been prior to the interest rate hikes.

“Buyers are being a little bit more cautious, even though lenders are lending them the money,” she said.

“They are cautious to take the full amount.”

 

Source: realestate.com.au

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