State of the Market Report

June 2024


Australia's housing market continued to perform well in May, with the pace of growth accelerating to its highest level in seven months and inventory levels plunging in mid-size capital cities.

While the Reserve Bank of Australia (RBA) has sounded a hawkish note due to concerns over a rebound in inflation, property analysts don’t expect this to undermine an eventual recovery in the housing market.

Home price growth accelerates

Growth in Australian home prices saw a slight gain in momentum last month. CoreLogic's Home Value Index for May rose 0.8 per cent for its largest monthly increase since October last year and its 16th consecutive month of growth.

Medium-sized capital cities led gains, with Perth, Adelaide and Brisbane seeing home price growth of 2.0 per cent, 1.8 per cent. and 1.4 per cent respectively.

Sydney housing prices saw an increase of 0.6 per cent, while in Melbourne they rose 0.1 per cent and in Canberra 0.5 per cent. Hobart and Darwin both posted declines in dwelling value, edging down -0.5 per cent and -0.3 per cent respectively.

Tim Lawless, CoreLogic research director, said low inventories in mid-sized capital cities were a key driver of robust price growth.

"The number of properties available for sale in Perth and Adelaide remains more than -40 per cent below the five-year average for this time of year, while Brisbane listings are -34 per cent below average," he said.

"Inventory levels in these markets remain well below average despite vendor activity lifting relative to this time last year.

"Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upwards pressure on prices."

Uncertainty surrounds the timing of rate cuts

At the start of the year analysts were almost unanimously confident the RBA was on track to reverse course on rate hikes by the end of 2024.

Some observers have started to express uncertainty about the near-term path of monetary policy following a rebound in inflation to 3.6 per cent in April.

Until recently all of Australia's big four banks expected the target cash rate to come down during the fourth quarter. ANZ has since broken ranks from its peers and doesn't expect an adjustment until 2025.

Recent remarks from RBA governor Michele Bullock have added to concerns the monetary authority could drag its feet on rate cuts. She told the senate estimates committee that the RBA board "won't hesitate to act" when it comes to lifting interest rates, should inflation continue to prove stubborn.

In its rates announcement this week, the bank warned that “inflation remains above target and is proving persistent”.

“Inflation is easing but has been doing so more slowly than previously expected and it remains high,” it said in a statement.

“The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out,” it said, repeating its position of a future rate rise if needed.

Developers and investors “shouldn't fret”

The cash rate is currently at 4.35 per cent, its highest level since the end of 2011. Higher interest rates mean more expensive borrowing costs for homebuyers and developers, which can pressure property prices.

Rob Flux, developer and educator from the Property Developer Network, says property investors and developers shouldn't be overly concerned about the RBA extending its hawkish stance, given rates will need to come down sooner or later.

The market is already well aware of this, and a short-term delay in rate cuts is unlikely to hamper price growth.

"We're still seeing a steady climb in prices everywhere because people are factoring in the inevitability of a rate cut eventually," Flux said.

NSW first to ramp up home supply

As Australia intensifies efforts to overcome its home affordability crisis, Flux sees upward pressure on site prices in NSW, thanks to legislative changes that will pave the way for more housing development.

"Legislative changes that affect low and medium-housing will arrive within the next month or so, and raise the development potential of sites," Flux said. "This has already led to opportunistic increases in pricing."

This pricing effect could eventually be negated by the huge increase in housing supply the legislative changes will enable.

"The NSW government has increased the number of properties that can have duplexes, terrace houses and manor houses," he said.

"The sheer amount of supply increase will counteract the fact people are incorporating the development uplift into their price points."

NSW government unveils major housing initiatives for vulnerable populations and essential workers

In the 2024 NSW budget, the Minns government has introduced a substantial spending plan aimed at increasing social housing stock, enhancing the quality of existing homes for vulnerable populations, and encouraging the private sector to boost construction efforts while motivating local councils to meet housing targets.

In a significant move, the government has allocated $5.1 billion to construct 8,400 new homes under the state body Homes NSW, with a priority for at least half of these homes to be available for victims of family violence. This initiative is part of a broader strategy to address the pressing need for public housing.

Additionally, the state has committed $1 billion to refurbish 33,500 homes within the public and social housing sectors, including a dedicated $200 million for properties managed by the Aboriginal Housing Office. Furthermore, housing for essential workers will see a boost, with $650 million earmarked for build-to-rent programs and accommodations in rural and regional areas, ensuring that key workers have access to affordable housing options.

New housing targets across 43 NSW councils

As reported by the NSW Planning, new housing targets have been introduced aimed at redistributing housing developments more evenly across Greater Sydney, the Illawarra, the Hunter, Central Coast, and regional NSW.

NSW is expected to deliver 377,000 new homes over the next five years under the National Housing Accord – some 75,000 homes per year.

The NSW Government’s program will reserve $200 million in grants for councils to fund more amenities and maintain local infrastructure.

In addition, support is being extended to include reforms to developer contributions of $1 billion over the forward estimates, and up to $700 million per year beyond that.

The housing supply targets across 43 councils has been a rebalancing act to place more housing in areas around established infrastructure where the majority (82%) of the housing will come from infill areas.

NSW Premier Chris Minns said: “We’re losing too many young people … who can’t afford a place to live in NSW. This has to change.

“[We] need to ensure we have a fairer balance of housing across the state – so housing is built close to already established transport links, schools and hospitals."

Victorian Government has announced 2 million houses by 2051

The Victorian government has set ambitious targets to build two million new homes by 2051, across various local government areas. Premier Jacinta Allan stressed the importance of planning for the significant population growth expected in Melbourne and Victoria in the coming decades.

To ease pressure on outer suburbs, higher housing targets have been set for inner city areas. The government hopes to ensure that homes are located near essential amenities and public transportation to support sustainable growth.

Various regions, including Melbourne, Maribyrnong, Melton, and Mitchell shire, have been assigned specific growth targets to accommodate the increasing housing demand.

Mass planning reform opportunities for SME developers

A recent report by the Property Council of Australia highlights substantial opportunities for small-to-medium property developers from recent mass planning reform changes. These reforms simplify approval processes, reduce bureaucratic hurdles, and lower costs, making development more accessible and predictable.

Key changes include expedited approvals, increased zoning flexibility, and transparent infrastructure contribution schemes, which collectively ease the planning and execution of projects for smaller developers.

The growing demand for well-located housing presents significant opportunities for developers focusing on small to medium-sized infill projects. These projects utilise vacant or underused land in established areas and benefit from existing infrastructure. Infill developments meet the rising demand for housing in areas offering proximity to transport, amenities and job centres. Additionally, they support the revitalisation of suburban areas that are aging and promote sustainability by reducing urban sprawl. This is where small-to-medium developers can play a crucial role in addressing the housing crisis and be a part of sustainable urban growth in Australia.

May 2024


Australian housing prices maintained their growth momentum in April, with a nationwide rise on par with gains posted over the past several months.

Uncertainty continues to surround the Reserve Bank of Australia's (RBA) future monetary policy decisions, however, after the authority once again kept its benchmark rate on hold at the start of May.

Australian home prices rise for the 15th month straight

April saw home values in Australia edge higher, with CoreLogic's national Home Value Index (HVI) lifting 0.6 per cent.

Home price growth shows no signs of flagging, as the increase matched rises posted in February and March.
April marks the 15th consecutive month that home prices have increased, for a cumulative growth of 11.1 per cent, or a $78,000 rise in national median dwelling values.

Australia appears well and truly out of the trough in home prices that hit in 2022, when rampant inflation prompted the RBA to launch a string of hikes that brought the cash rate target to its highest level in over a decade.

Nearly every capital city saw improved growth in April, although rates of increase showed mark disparities due to the variable conditions of Australia's regional property markets.

Sydney maintained a monthly change in home values of 0.4 per cent, consistent with each of the past three months. Melbourne's housing market managed to tread water with a 0.1 per cent decline, which is some improvement compared to the -0.8 per cent dip over the three months to January.

The larger capital cities outside of the south east saw the strongest performance. Perth led growth with a 2.0 per cent rise in April, while Adelaide took second place with a lift of 1.3 per cent, followed by Brisbane with a 0.9 per cent increase.

Uncertainty surrounds interest rates

Following its board meeting on 7 May, the RBA announced it would leave the cash rate target unchanged at 4.35 per cent. The target rate is currently at its highest level in 13 years.

Remarks made by the RBA have dampened widespread hopes for imminent rate cuts. The board said inflation remains high and is falling more slowly than expected, after CPI rose by 3.6 per cent over the year to the March quarter, as compared to 4.1 per cent over the year to December.

Some economists are concerned that inflation could still stage a comeback, with former RBA governor Philip Lowe observing that the monetary authority may need to implement further hikes to keep price gains under control.

Rob Flux, developer and educator at the Property Development Network, said that while interest rate adjustments now lie under a cloud of uncertainty, the RBA will still hold the course towards more accommodating monetary policy by the end of the year.

"The RBA's moving much slower than anticipated, and there are even some market commentators predicting there will be interest rate rises.

"I don't think that's real - it's just rhetoric. The big four banks are still all predicting rate cuts by December - it's just slower than expected."

According to Flux, the RBA is holding off on hasty interest rate adjustments to ensure inflation is well and truly tamed before it puts its foot back on the pedal.

Fundamentals still strong

Given the strength of underlying fundamentals, Flux expects the property market to bounce back rapidly once the RBA starts trimming rates.

Developers and investors should keep an eye out for bargain opportunities while interest rates are still high, in anticipation of a reheating of the market in 2025.

"High interest rates mean people are still being squeezed," Flux said. "There are buying opportunities out there - you've just got to look harder for them."

Key budget initiatives and implications for property development and construction

The 2024-2025 Australian Federal Budget introduces several measures aimed at addressing the housing supply crisis and supporting construction sectors, but what does this mean for property developers? Here is an analysis from the investment team at CrowdProperty.

Infrastructure investment

The budget allocates $1 billion for trunk infrastructure to support new housing development. This is part of a broader $16.5 billion investment over the next decade for new and existing infrastructure projects, which includes $4.6 billion for 69 new projects. Additionally, $1.9 billion in loans for community housing providers and other charities will facilitate the construction of 40,000 social and affordable housing units, contributing to the government's ambitious goal of 1.2 million new homes over the next five years.

Skills and workforce development

A significant focus is placed on developing a skilled construction workforce. The budget dedicates $1.6 billion over five years to reform tertiary education and increase funding for apprenticeships and training programs through the Construction Forestry Maritime Mining and Energy Union (CFMEU). This includes $90.6 million for additional fee-free TAFE training places and pre-apprenticeship programs, which are crucial to addressing the current skilled labour shortages in the industry.

Foreign investment and regulatory changes

Reforms to the foreign investment framework aim to attract more capital into the Australian property market by streamlining approvals for repeat investors in non-sensitive sectors like housing and construction.

Support for affordable housing and renters

The budget includes a $2 billion Social Housing Accelerant Payment for 4,000 new or refurbished social houses and a further increase in Commonwealth Rent Assistance by 10 percent, representing a total investment of $1.9 billion. These measures aim to ease rental pressures and enhance affordability, directly impacting the housing market's dynamics.

Gender equality and industry diversification

To promote gender equality in the construction industry, the budget introduces the Building Women’s Careers program with a $55.6 million investment. This initiative supports women’s participation in traditionally male-dominated industries and provides access to flexible training programs.

Anti-money laundering efforts

The budget earmarks $166.4 million to implement reforms to Australia’s anti-money laundering and counter-terrorism financing regime, including real estate among the sectors required to report suspicious transactions. This move aims to enhance regulatory compliance and transparency within the property market.

CrowdProperty’s conclusion

The additional commitment to the already announced Homes for Australians plan is certainly welcomed by the industry. The focus on increasing supply and an investment into supporting the infrastructure (roads, energy, water and community) rather than reverting to policy that simply fuels demand is a positive, and one that will still create opportunities for property developers.

The recognition that investment in facilitating skills development is also important for the industry that is still feeling the effects of the homebuilder policy stimulus. The training investment needs to include developing skills and capability in modern methods of construction. The lack of these skills and capability is seen as holding back the delivery of Home for Australians.

April 2024


The Australian property market extended its growth streak in March, with housing prices nationally posting their 14th consecutive monthly increase.

The health of Australian housing prices could receive a further boost from a dovish turn from the Reserve Bank of Australia (RBA), as well as an aggressive push from some regional governments to tackle the housing supply crisis.

Home prices continue to rise in March

Australian housing prices continue to recover from the slump they endured from April 2022 to January 2023, when CoreLogic's national Home Value Index (HVI) declined by -7.5%.

As of the end of March the national HVI had risen by 10.2 percent since the end of the slump, breaching new record levels in every month since November 2024.

In March, the HVI rose 0.6 percent, maintaining a growth rate on par with the increase in February and extending the current cycle of home price increases to its 14th consecutive month.

All of Australia's capital cities posted gains in March with the exception of Darwin, which saw a -0.2 percent decline.

Dovish turn from RBA expected to boost prices

Analysts expect housing prices to receive a boost from an end to the hawkish cycle of rate hikes from the RBA in the wake of the Covid pandemic.

Property analyst John Lindeman of Lindeman Reports, said conditions are ripe for the RBA to start cutting interest rates by the start of the second half.

"The GDP figures for the December quarter showed that our economy is flatlining, so the RBA will be watching the next set of figures due for release on 5 June.

"If the economy is found to be contracting, it would only take a fall in inflation or a rise in employment to motivate the RBA to lower rates."

Rob Flux, educator and developer from the Property Developer Network, said expectations of a shift from the RBA have already prompted Australia's top financial institutions to reduce interest rates.

"We're seeing the big four banks starting to drop their fixed interest rates - that's a good sign that they’re expecting interest rates to drop in the not-too-distant future.

"Depending on the bank, they're expecting the RBA to implement its first rate cuts between September and November."

Flux said expectations of rate cuts are already having a positive impact on the housing market, even prior to concrete action from the RBA.

"We're starting to see the market warm up - people are starting to get back into the market in anticipation of cuts."

CrowdProperty CEO David Ingram cautioned that Australia will be watching inflation and jobs data in the US and Europe.

"It is widely expected that Australia could follow overseas economies," Mr Ingram said.

"If inflation remains higher overseas we may be waiting longer for rates to be cut here.

"We are also seeing the banks drop the rate of fixed term deposits. This means investment into private credit is becoming more attractive, opening up new capital to non-bank lenders and ultimately developers."

New opportunities potentially emerging for developers

While interest rate cuts will buoy housing prices across the country, Flux said the impacts and levels of opportunity this creates will vary from region to region, given differences in the regulatory positions of local governments.

According to Flux, NSW is leading Australia in efforts to tackle the housing supply crisis, which means its property market is best positioned to rise once rate cuts become a reality.

"NSW has the best plan, and we're only months away from that plan becoming legislation," he said.

"People are already stepping back into the NSW market again, to speculate on the opportunities that could be created by proposed density increases.”

Despite some inconsistencies in regulatory practices across Queensland, Flux sees opportunities in the state thanks to its relative affordability compared to other parts of Australia.

"From an affordability perspective, people are leaving Sydney and Melbourne in droves," he said. "They can sell a small $2 million house here and buy a mansion in Brisbane."

John Lindeman said the underlying fundamentals of the Australian property market will continue to drive price increases across the board. Higher rents will create strong opportunities for investors even in more affordable areas.

"The rate of housing completions is declining, and well below the number needed to house our rapidly growing population," he said.

"This provides a new opportunity for investors, as escalating rents are generating cash flow neutral and even cash flow positive investment opportunities in lower-priced locations."

Cost normalisation will help developers seize opportunities

Developers could find themselves better positioned to capitalise on upcoming opportunities in the Australian housing market, as construction costs trend towards normalisation.

National construction costs further stabilised in the first quarter of 2024, with Core Logic’s Cordell Construction Cost Index (CCCI) posting just a 0.8 percent rise. This increase was the same as the figure for Q4 2023 and brought the annual change in the CCCI down to 2.8 percent, for the smallest annual increase since March 2007 (2.7 percent).

Stabilisation of construction costs is good news for developers, given high material prices have been a key issue causing project delays during the post-Covid spate of inflation. Cost stabilisation will also help to pave the way for new projects, by providing greater confidence in feasibility studies for potential investors.

Analysis of NSW planning changes due to come into effect

The NSW Government's upcoming Transport Oriented Development (TOD) planning reforms, slated to commence this month, aim to tackle the housing crisis by strategically distributing over 170,000 “well-located” homes across Sydney, the Illawarra, Hunter, and Central Coast regions. This initiative, spearheaded by the Transport Oriented Development State Environmental Planning Policy (TOD SEPP), aims to mark a significant step towards addressing the pressing need for affordable housing. By identifying 31 stations across 13 local government areas as focal points for new housing within 400 meters, the government wants to enhance urban density and accessibility.

An examination of these reforms reveals potential benefits for small and medium property developers. Firstly, the expansion of the TOD SEPP to include additional stations, such as Cardiff, Cockle Creek, Belmore, Lakemba, Punchbowl, and Woy Woy, presents potentially lucrative opportunities for developers to capitalise on emerging markets in high-demand areas. Moreover, the flexibility granted to councils to phase in the TOD SEPP on certain sites allows developers to participate in comprehensive master planning and detailed work, facilitating a more streamlined and efficient development process. Additionally, the government's emphasis on collaboration with local councils and tailored housing plans offers developers the chance to engage in community-centric projects that align with the specific needs and preferences of residents.

Critics, however, raise concerns about the potential challenges associated with increased urban density and infrastructure demands. While the reforms aim to address the housing crisis, questions linger regarding the adequacy of infrastructure provisions to support the influx of new residents. Nevertheless, Minister Paul Scully's assurance that infrastructure investments will accompany housing growth provides some reassurance to developers. Overall, the TOD planning reforms represent a significant opportunity for small and medium property developers to contribute to the alleviation of the housing crisis while tapping into emerging markets and engaging in community-driven projects tailored to local needs.

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