10 insights into the investment property market

In recent news, rental stress continues to heat up; rents grow at the fastest pace in two years; vacancy rate lifts – albeit only slightly; median house price hits $1.113M; no more avo toast – Millennials are the most active property investors; and Airbnb to launch portal to provide transparency for local councils. 

Each month we pull together 10 insights impacting the investment property market. Read on for this month’s instalment… 

1. Rental stress continues to rise as affordability wanes. According to Suburbtrends’ Rental Pain Index for April 2024, 85.63% of suburb areas in Queensland are in extreme rental pain, along with 85.01% in WA. WA also experienced the sharpest increase in rents – up 15.66% in the past 12 months. The ANZ/CoreLogic Housing Affordability Report showed the portion of median income required to service median new rents reached a high of 32.2% in March 2024, as median new rents reached $621 per week. It was the fifth consecutive quarter in which the median income-to-rent ratio was above 30%. For low income earners, the percentage of income required for rent was 54.3%. Suburbtrends’ Rental Rewind report noted that the percentage of rental properties priced under $400 per week had dramatically declined in the past three years. 

2. Rents up 3% over March quarter. The national rental index was up 2.8% in the March 2024 quarter – the fastest quarterly pace of rental growth since the three months ending May 2022 (2.9%), according to CoreLogic. Unit rents also continued to rise faster than house rents across the combined capitals, up 2.9% and 2.7% respectively in the March quarter. PropTrqack’s Rental Report for the quarter showed median advertised rents across Australia increased by 3.4% to reach $600 p/w. Over the 12 months to March 2024, advertised rents increased by 9.1%. Despite record-low vacancy rates across the country, rents remained relatively stable in March, according to data from Rent.com.au.  

3. House prices reach new heights. Australia’s median capital city house price hit a record $1.113 million in the March 2024 quarter, data from Domain revealed. Capital city unit prices rose to a median of $638,000. It marked the fifth consecutive quarter of growth for houses and the fourth for units, according to Domain’s House Price Report. Records continued to tumble with house prices in Sydney, Brisbane, Adelaide and Perth at a record high, while unit prices hit record highs in Brisbane, Adelaide and Perth. Domain expects price growth to continue.  

4. Vacancy rate improves. According to PropTrack, there was a slight rise in the number of homes available for rent in March, with the national vacancy rate increasing 0.04% to 1.11%. Vacancy across Australia’s combined capital cities was at the second lowest level on record in March, with just 1.08% of rental properties sitting vacant. Availability was slightly better in the regions, with 1.17% of rentals vacant. In March, the total number of rental vacancies Australia-wide was 31,356 residential properties, according to SQM Research.  

5. Millennials drive investment property market. Millennials are driving the investment property market, according to research by CommBank. The bank found 46% of its new property investors in 2023 were made up of Millennials (born 1981–1996), followed by Gen X (born 1965–1980) who accounted for 37% of all new investment property purchases. Nationally, the average age of property investors was 43 years, and the average loan size was just over $500,000.  

6. WA passes new tenancy law reforms. Changes are coming into effect in stages from May, including a ban on rent bidding, limiting rent increases to once every 12 months, making it easier to rent with pets and allowing minor modifications. The State also passed new laws requiring all short-term rental accommodation in WA to be included on a new register.  

7. Minimum rental standards reminder. Victoria’s Consumer Affairs taskforce began a crack-down on minimum rental standards in the wake of a rise in tenant complaints. Landlords were reminded that individuals can face maximum penalties of over $11,000, while companies face maximum fines of over $57,000 if the rental does not meet minimum standards.  

8. Legal corner. An ACT tenant who sublet a room in her landlord’s property on Booking.com and housed up to five cats without permission was ordered to leave the property. An unlicensed Western Australian real estate agent who pocketed rent was convicted and fined more than $5,500 for representing herself as a real estate agent despite not holding a real estate and business agent licence. A Melbourne real estate agency was ordered to pay $197,740 and fined $5,000 after being found guilty of trading without a licence. Consumer Affairs Victoria warned agents about their trust account responsibilities in the wake of a case against a Springvale agent whose alleged misuse of rental bond money could see him disqualified from holding a real estate licence. The agency also pursued a court filing against an unregistered Cranbourne builder that it says failed to complete work for seven separate consumers after taking deposits (totalling more than $100,000) for the jobs. 

9. Capital cities shine. Capital cities outshone regions for property investment potential in Canstar’s 2024 Rising Stars Report. Affordability and lifestyle benefits were the biggest drawcards for regional living in recent years, but property prices have surged in popular regional areas as more people made the exodus from capital cities. Regional rents in Australia continued to rise in March 2024, with the national median rent increasing by 3% year-on-year, according to Rent.com.au. All states and territories recorded annual rent increases, with the exception of the NT, with the most significant increases seen in Queensland (14.42%), WA (13.21%) and SA (12.86%). The Mackay LGA topped PRD Real Estate’s annual list of the 10 most affordable regions in the country.  

10. Airbnb innovation. Airbnb is set to launch City Portal in Australia, allowing local governments to access data on the number of listings in their area, number of guests and average guest spending, among other statistics.  

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.