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Understanding the Australian Property Market

Understanding the Australian property market

The Australian property market consistently garners plenty of attention both from locals and overseas investors. 

Diverse, resilient and dynamic, several factors influence Australia’s property market and for anyone looking to buy or sell, it is vital to understand these before making a commitment. 

In this detailed guide, we’ll take a closer look at these factors and the intricacies of property in Australia so you can make an informed decision regarding your sale or purchase. 


An Overview Of The Australian Property Market 

Australia is a vast country with a huge variety of properties available in residential, commercial, and industrial real estate sectors across urban, suburban and rural areas.

A relatively young nation with a considerably smaller population than its economic peers, Australia is ranked as one of the most expensive countries in the world in which to buy a house. 

So why is this? As with most property markets globally, the Australian market is driven by factors such as economic conditions, government policy, immigration, population growth, interest rates and consumer sentiment among others. 

Our unique position as a young and isolated island continent plays into these factors, bringing additional challenges and influences. 

Factors that influence property market

Factors Driving The Australian Property Market 

1. Economic Conditions

During times of economic growth, consumer confidence is generally higher, leading to an increased demand for properties and therefore higher prices. 

Equally, during economic downturns such as when there is increased unemployment and inflation, consumers tend to be more conservative – potentially lowering property pricing and demand. 

This is not always the case, however, as recent property trends in 2023 demonstrate. Despite record inflation and increased cost of living, property prices across Australia have remained stable with minimal decrease in demand. 

2. Population Growth 

Australia’s population is affected by high rates of immigration alongside natural growth. However, recent data does show Australia’s birth rate is in decline and at a near-record low. 

Population growth drives the demand for housing, making the market more competitive and as a result, prices naturally increase. 

As of 2024, current housing development is being outpaced by population growth, meaning that the market is only going to become more competitive and entry will be at a higher price point. 

3. Government Policies

Government decisions such as taxation rates and policies, zoning regulations, investment in infrastructure and development, homebuyer incentives and more all influence the market. 

For instance, the development of improved public transport to a suburb can quickly see it become more desirable and therefore prices will rise. 

Equally, the decision to rezone an area as commercial when it was formerly residential can see house prices plummet. 

4. Interest Rates

The cash rate set by the Reserve Bank of Australia (RBA) can greatly influence property prices. 

When interest rates are low, borrowing money becomes cheaper and more accessible, encouraging more people to purchase property. With more buyers in the market, house prices typically rise. 

On the flip side, as interest rates rise, people’s borrowing capacity or ability to service a loan decreases, potentially deterring buyers. Making for reduced demand and lowered house prices as a result. 

5. Foreign Investment 

Australia permits a significant amount of foreign property investment to occur. While this can be beneficial for our economy as a whole, it also creates challenges with supply and demand. 

Australia offers many health and lifestyle benefits and as result, our high property prices can be viewed as cheaper compared to some overseas nations. 

This makes many foreign investors willing to overpay for a property which then has the potential to drive property prices up. 

6. Lifestyle Preferences 

Much of Australia’s population lives close to major capital cities. This is due to several reasons such as employment and proximity to essential services such as good education and healthcare, but is also tied to lifestyle. 

Buyers preferring to be close to entertainment, dining, beaches or similar will be unlikely to consider regional areas. This once again creates competition due to limited housing availability compared to demand in these areas. 

7. Changing Demographics

Shifts in household incomes, birth rates, urbanisation and an ageing population that is increasingly living longer, all impact the property market. 

For example, Australians are living longer than ever before and often remaining in their homes rather than entering care in their old age. This means less turnover of property and reduces property availability. 

Changes in household income and a continually lowering birth rate can also see individuals with more disposable income to spend on housing. 

These demographics not only affect current market conditions but also shape future housing demands and preferences. 

8. Property Appeal 

Properties in sought-after locations or that offer unique features such as larger land size or panoramic ocean views will often command much higher prices than those nearby. 

This can push a suburb’s median house prices up and make an area more expensive to buy into even if the property in question has comparably lower appeal. 

9. Consumer Sentiment 

There’s an element of psychology that also comes into play in all property markets. Consumer sentiment or feeling can create a self-fulfilling prophecy. 

What this means is that if everyone is being told and believes that prices will rise they are more inclined to rush out and buy. This ensures that prices do indeed rise as everyone begins to compete against one another, increasing demand and pushing prices up. 

Consumer sentiment is usually tied to things such as economic forecasts, what is being reported by the media and investor behaviour. 

How to navigate the property market

Tips For Navigating The Australian Property Market 

There is no avoiding the complex interplay of factors that influence the Australian property market. Before investing, it is essential to do your research and take time to understand market conditions. 

To keep you from making a poor investment we suggest:

Tracking The Market 

Familiarise yourself with local property trends, price ranges and the conditions of the market you are interested in buying in. 

Take note of recent sales data and how prices fluctuate over time. Checking how long a property is spending on the market before selling can also offer valuable insights. 

Seeking Professional Advice 

It is all too easy to get caught up in consumer sentiment and feel compelled to panic buy. 

Seeking out professional guidance from a property broker can help you locate the right property at the right price. Brokers know what is really happening in the market and have a deep understanding of current factors influencing demand and pricing. 

They may also offer insights into up-and-coming areas you hadn’t considered, helping you to make a wiser investment. 

Setting Limits

From your maximum budget to your non-negotiable must-haves, being firm in what you are prepared to purchase and at what price can help you avoid market pitfalls. 

You are far less likely to be unduly influenced by consumer sentiment and will be better positioned to find the right property for your circumstances. 

Keeping An Open Mind  

Being flexible or willing to consider different areas or features in a property can make it easier to enter the market no matter how challenging it is at the time. 

You may even discover an area you like more or end up with a better property at a lower price than you could have managed elsewhere. 

Being Across Available Financial Assistance 

Getting your foot in the door of Australia’s property market is undoubtedly a challenge, however, there are some avenues for financial support from the government to help you.

The first home buyer grant helps to offset buying costs as does the offer of reduced stamp duty. 

Ensuring you’re aware of these entitlements and checking whether you are eligible may help you enter the market sooner or alter your spending capacity. 

Considering Building Over Buying 

While the government does offer first home-buyer grants and reduced stamp duty for existing housing, additional funding may be available in your state or territory for new home builds. 

This can help to offset increased market prices while eliminating issues with demand or competition.  

Being Prepared To Negotiate  

The property market is just that, a market! As a market, prices are open to negotiation and nothing is set in stone until a property is sold. 

Regardless of what factors are in play when you are seeking to buy, anything is possible. A vendor may have their own motivating factors to sell which override other considerations. 

So long as you are across market trends and well-informed, you can make a fair offer and negotiate confidently. 


Avoid Property Market Pitfalls With Stop Renting Perth 

At Stop Renting Perth, we know just how challenging the property market can be. 

From overpriced rentals and barely livable homes selling for a fortune, it is easy to become discouraged. 

Passionate about helping you become a homeowner, we offer house and land packages that take advantage of all available government grants and that can see you owning a home sooner than ever. 

With over 70 home designs to choose from and the ability to build in locations all over Perth, we support you to move into your dream home and skip the stress of house hunting. 

To learn more, speak with one of our expert team members today at 0402 513 446 and book your obligation-free consultation. 

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We’re here to help, so let’s get started! it’s time to stop renting and start taking steps towards home ownership.