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  • Affordability becomes a major drawcard in Australian property

Affordability becomes a major drawcard in Australian property

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It's been another resilient year so far for property markets around the country as national home values rose +1.6 per cent over the first quarter alone. 

There's been a shift towards more affordable options, though, as high interest rates and even higher prices put the squeeze on buyers. 

Find out what the emerging trend means for sellers in 2024 and whether it's here to stay.

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The cheaper end of the market is rising rapidly

Property markets are cyclical in nature and history tells us that the beginning of an upturn is typically led by the upper quartile of the market.

Essentially, this means the top 25 per cent of properties in terms of their value are the ones that see prices increase the most when the market is on the up. 

That expectation was proven once again in 2023 as Australia's most expensive homes saw the highest rates of growth during the market rebound. 

CoreLogic's research director Tim Lawless explained that "This trend is most evident in Sydney, Melbourne and, to a lesser extent Brisbane, where upper quartile values clearly led the 2023 upswing through the first half of the year."

But CoreLogic data is now showing that the tables have turned, with the least expensive 25 per cent of homes now outperforming the rest. 

Australia's most affordable homes are seeing prices rise at a rapid rate. Source: CoreLogic

"The lower quartile across every capital city has recorded a stronger outcome for housing values relative to its upper quartile counterpart over the past quarter," Mr Lawless noted, adding that the greatest divide is being seen in Perth, Adelaide and Brisbane. 

The indication is that buyers are flocking to more affordable housing options as tighter borrowing capacities and higher prices push more properties and suburbs out of reach.

Units are on track to outperform houses in 2024

As the year has started to unfold, units are looking like they're on a strong path to enjoy higher price gains than houses. 

Over the first quarter of 2024, PropTrack has found that national unit prices grew +2.0 per cent compared to +1.5 per cent for houses. 

The effect has been seen in Australia's five largest capital cities as well as regional markets. 

Annual unit price growth is beginning to creep up to houses and looks set to overtake in 2024. Source: PropTrack

The gap between house and unit prices has reached record levels, and PropTrack senior economist Eleanor Creagh explained that the vast gap between the two property types has meant units now represent better value for buyers. 

"Strong demand for inner-city living post-pandemic, coupled with the rapid rate of population growth and housing supply constraints alongside the relative value units offer are likely buoying buyer demand and pricing in the apartment market," she said. 

The perfect storm of high interest rates, a shortfall of new developments, record levels of overseas migration and prohibitively high house prices are expected to keep pushing demand towards units. 

Oxford Economics senior economist Maree Kilroy said "While we expect national price momentum to slow in the second half of this year, it will accelerate again in 2025, with units set to outperform houses over the forecast period."

What does it all mean for home sellers in 2024? 

From the above data, units and more affordable houses do look best placed for strong growth in the year ahead. 

But healthy price growth is expected across the board in 2024 — it's just a matter of which segment of the market performs even better. 

Westpac's latest price forecasts show positivity across the board, with overall gains of +6 per cent predicted for this year. 

Westpac is predicting another solid year for property performance across Australia. Source: Westpac Economics

Housing undersupply is a nationwide issue at the moment. Australia's population is growing at historic pace at a time when developers are struggling to deliver new builds. 

As long as demand continues to outstrip supply there will be upward pressure being put on property prices, making for broadly strong selling conditions.

Thinking of selling in 2024? 

If you're still looking to get in on the action this year, it's important to be as prepared as possible in order to cut through the competition and achieve a standout result. 

Step 1: Understanding how your market is performing

Every market is different, and understanding your local market is fundamental to making the right selling decisions. Our guide to tracking market trends and data will help you to get a clear picture of how your market is performing and how that impacts you as a seller. 

Step 2: Know what your property might be worth

Getting a free home value estimate is a great way to set a foundation for your selling expectations and begin planning the path forward.

Step 3: Get a no-obligation market appraisal from a top real estate agent

Understand what your property could sell for in the current market by speaking to the top-performing agents in your suburb. Comparing top agents in your area will help you find the perfect partner for your selling journey and move towards a successful result.

Step 4: Finally, get your property listing-ready

Taking a thorough approach to preparing your home for sale is another critical step. From cleaning, decluttering, painting and performing other cosmetic renovations to home staging, photography and marketing, getting your property to sale-ready condition is a must.