10 insights into the investment property market

In recent news, despite rental growth slowing, affordability continues to decline; vacancies inch higher; national median home value hits $800,000 for the first time; listings up as re-sale profits rise; Queensland and WA top the list for rental yields; RBA holds again, and economists weigh in on when rates might head downwards; the regional renaissance continues; and more people would like Deadpool as their roomie than Tay-Tay!

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

1. Rental affordability continues to bite. Figures from REIA’s Housing Affordability Report showed rental affordability declined over the September 2024 quarter, with the proportion of income required to cover median rents increasing to 24.9%. Research commissioned by Master Builders Australia found more than one-third of tenants have gone without essentials like food, medicine, or education to pay their rent, while 39% have struggled to pay their rent in the last year. Property Update reported on the 50 most expensive suburbs in which to rent.

2. Rental growth slows. Data from SQM Research showed national rents were down 0.5% in December (-0.3% for houses and -0.9% for units). Across the capital cities, average house rents were up 0.4% (to $840 p/w), while average unit rents were down 0.3% (to $618 p/w). While rent values remained high in 2024, the rental growth rate softened, according to CoreLogic’s Best of the Best report. Annual growth in rent values slowed to 5.3% in the year to November, down from 8.1% in the year prior and a high of 9.6% in the year to September 2022. Nationally, Noosa Heads (NSW) houses had the highest rent growth in the year at 23.7%. Geraldton (WA) topped the list for unit rent growth at 21.5%. Across the capital cities, Perth dominated the list of suburbs with the highest house rent growth in the year to November.

3. Vacancies rise. The residential vacancy rate rose to 1.4% in November, according to SQM Research. The total number of rental vacancies increased to 41,894 residential properties, up from 36,486 in October.

4. House prices continue to climb, albeit more slowly. National home prices reached a new peak in November, but momentum slowed, according to PropTrack’s Home Price Index. Prices lifted 0.15% in November (marking 23 consecutive months of growth) and the national median home value hit $800,000 for the first time. CoreLogic’s national Home Value Index recorded an incremental increase of 0.1% in November – the smallest rise since January 2023.

5. New listings dip as old listings rise. PropTrack’s Listings Report for November showed national new listings decreased by 19.7%. Despite the reduction in new listings over the month, national total listings remained higher than they were a year ago. Data from SQM Research revealed total listings rose by 7.6% over the month – driven by a 6.4% rise in old listings (stock on market over 180 days) and a 22.6% rise in properties being on the market between 30 to 90 days. According to CoreLogic’s Best of the Best report, the number of home sales increased 8% in 2024 – despite there being a 4% decline in sales volume for the spring selling season – while the Pain & Gain report showed Australians made a record $295,000 median profit when reselling their home or investment property in the three months to September 2024.

6. Top spots for rental yields revealed. According to REIA’s Real Estate Market Facts for the September 2024 quarter, rental yields ranged from -5.3% to +5.4% over the quarter, depending on accommodation type and market. CoreLogic’s Best of the Best report for 2024 identified the suburbs and towns with the highest rental yields. Queensland and WA dominated the top 100 suburbs for rental yield, according to Coronis Group. PropTrack also explored the top 10 suburbs with the highest rental yields.

7. Money matters. At its final Board meeting for 2024 on 10 December, the RBA decided to leave the official cash rate at 4.35%. According to the Finder RBA Cash Rate Survey, nearly half (49%) of the economists polled predict the first rate cut will come in May 2025, while 24% forecast cuts will begin even later. Housing affordability in Australia reached a historic low during the September 2024 quarter, according to REIA’s Housing Affordability Report. The proportion of median household income required for average loan repayments climbed to 48.6%. Research from Money.com.au revealed mortgagees will pay an additional $3,586 a year on their home loan repayments after the typical variable interest rate rose from 6% to 6.27% in the last 12 months.

8. Investor news bites. NAB’s Market Megatrends 2024 notes investor activity has been on the rise with the value of lending to investors (34.2%) more than double the rate of owner-occupier lending (16.8%). Investors accounted for 38.6% of lending by value and 38.1% of lending by volume in August 2024. Interest payments account for 72% of repayments on investor loans, according to research from Money.com.au. Research from the University of South Australia and RMIT University indicated ‘Mum and Dad’ investors could be the key to affordable housing. Realestate.com.au identified the 100 suburbs to watch in 2025.

9. Regions wrap. According to the Regional Movers Index for the September 2024 quarter, population flows to regional Australia were at their highest level since March 2022. Two regional markets took the top spots for value increase nationally in 2024, according to CoreLogic. WA's Beachlands house market rose 38.4% in value over the year, while Queensland’s Dolphin Heads saw the highest value growth for units at 52.8%.

10. Snippets. The Queensland Government announced the removal of restrictions on first home buyers renting out rooms. WA’s short-term rental accommodation register becomes mandatory on 1 January 2025. The price difference between houses and apartments is as high as 56%, according to research from Nuestar and Hotspotting. CoreLogic identified a big benefit to newer builds – energy efficiency. Melbourne ranked as the fourth most liveable city in the world by The Economist. Sydney ranked seventh. Brisbane was named the second best in the world for cost of living by Compare the Market. Wolseley Road in Sydney's Point Piper is the nation’s most expensive street, with median house prices surging 36% to $45 million, according to Ray White Group. Pantone announced the 2025 colour of the year – Mocha Mousse. According to Zillow Rentals, more people would like Ryan Reynolds as a roommate than Taylor Swift.

*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.