Australia Real Estate Market Size and Share Outlook - Forecast Trends and Growth Analysis Report (2024-2032)

Australia Real Estate Market Overview

The market growth is dependent on interest rates, which have a significant impact on housing prices. Lower interest rates stimulate demand for residential real estate as borrowing becomes more affordable, leading to price increases. The Reserve Bank of Australia's monetary policy decisions on interest rates have a direct influence on the housing market's performance.

Economic growth is another crucial factor influencing the Australia real estate demand. During periods of economic expansion, rising incomes boost people's purchasing power for homes, driving up property prices. Conversely, economic downturns and recessions can lead to job losses, reduced incomes, and decreased demand for housing, resulting in lower property prices.

Additionally, certain areas of Australia are experiencing higher demand for real estate due to factors like better employment opportunities, quality schools, amenities, and rapid infrastructure developments. Moreover, the increased immigration of international students has driven the need for more housing in Australia, which is positively influencing market development.

Australia Real Estate Market Trends

Monetary Policy Adjustments

Anticipated changes in monetary policy, such as potential interest rate cuts, are expected to impact the housing market positively. Lower interest rates could enhance borrowing capacity for buyers, stimulating demand and possibly leading to an increase in property prices later in 2024. Economists from major banks, including Westpac and NAB, predict that the RBA will implement its first interest rate cut as early as May 2025, with some forecasts suggesting a cut could occur in February 2025, further boosting Australia real estate market value. A rate cut of 0.25 to 0.5 percentage points could significantly enhance borrowing capacity for homebuyers, fuelling demand in the housing market.

According to an analysis from Ray White Economics, a drop in interest rates could lead to an average increase in property prices of nearly USD 15,000 in cities like Sydney and Melbourne within the first month following a rate cut. The overall property values across Australia could rise by approximately 0.6%, adding about USD 5,000 to the average property price.

Rise of the Rental Market

The rental market has seen a significant rise, with combined capital house rents rising by 5% in early 2024, marking the steepest quarterly gain in 17 years. This growth of Australia real estate market is attributed to a supply-demand imbalance, with ongoing pressure on rental prices as vacancy rates remain low. According to Domain's March quarter 2024 Rent Report, the median asking rent for houses in Australia’s combined capital reached USD 630 per week, up from previous quarters. This increase reflects rising demand amid limited housing supply.

As per the most recent information provided by CoreLogic, rental prices experienced a modest increase of 0.2 per cent during October 2024. Concurrently, the national vacancy rate rose to 1.8 per cent, reflecting a 40-basis-point rise from the previous record low of 1.4 per cent noted at the same period last year.

Industry News

November 2024

As per the Overseas Search Report published by PropTrack for November, which analyses the volume of searches conducted on realestate.com.au from international locations, Adelaide city ranked as the eighth most sought-after market for property purchases within Australia. Additionally, properties located throughout the Adelaide metropolitan area were positioned at number 20 in the search rankings.

November 2024

A Brisbane apartment tower, featuring units starting at USD 8.3 million, has completely sold out within a year, reflecting the escalating demand for luxury real estate. Sorano House has reached its maximum height after achieving a historic sale price for its penthouse, which was sold off-the-plan for USD 14 million earlier this year.

Opportunities in Australia Real Estate Market

While some existing investors are affected by high interest rates and increased holding costs, new investment purchases are on the rise. Investor loan commitments increased by 18.8% over the past year, particularly in high-growth markets like Queensland and Western Australia, which increases the Australia real estate market revenue.

As per the latest Mortgage Insights report from Money.com.au., Queensland has emerged as a significant player in the investment market, accounting for 23.4% of new investor loans, surpassing Victoria for the first time in nearly two decades. The state saw 4,593 new investor loan commitments, indicating a robust demand driven by factors such as infrastructure development and lifestyle appeal. A survey conducted by the Australian Property Investor (API) indicated that Queensland, Western Australia, and New South Wales are solidifying their positions as leading property markets for investors, capturing three-quarters of respondents' interest.

Australia Real Estate Market Restraints

Australia is currently experiencing an alarmingly low level of new housing supply, with the Urban Development Institute of Australia (UDIA) reporting that housing supply remains at near-decade lows while demand is at record highs. The UDIA Housing Index indicates that supply is 12% below the long-run average and 21% below peak performance, leading to increased pressure on both property prices and rental availability.

The construction sector is facing challenges from rising expenses due to inflation in construction materials and a scarcity of labour, impacting Australia real estate demand growth. The elevated costs associated with construction are discouraging developers from launching new initiatives, thereby worsening the current deficit in housing supply. Numerous projects have turned financially impractical due to heightened borrowing costs and operational expenditures, resulting in postponements or cancellations of new housing developments.

Australia Real Estate Market Dynamics

Australia's population growth, driven by immigration, continues to influence housing demand significantly. As of September 2024, with annual arrivals reaching between 350,000 and 400,000 people, there is sustained pressure on housing markets, particularly in metropolitan areas where new arrivals typically settle. This demographic shift is prompting investors to consider the preferences of migrant populations when identifying lucrative Australia real estate market opportunities in rental properties and new developments. 

Immigrants tend to be disproportionately young adults, which further increases demand for housing, particularly in metropolitan areas like Sydney and Melbourne where job prospects are more favourable. Approximately half of the growth in households in Melbourne is attributed to overseas migration, underscoring its critical role in shaping housing demand. Moreover, a report from Forecast indicated that Australia’s migrant population would grow by more than 700,000 between the 2022 and 2024 financial years.

Australia Real Estate Industry Segmentation

“Australia Real Estate Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

Market Breakup by Property

• Residential
• Commercial
• Industrial
• Others

Market Breakup by Business

• Sales
• Rental

Market Breakup by Region

• South Wales
• Victoria
• Queensland
• Australian Capital Territory
• Western Australia
• Others

Australia Real Estate Market Share

By Property Insights

Australia real estate industry analysis based on residential, commercial, and industrial properties states that the residential real estate sector caters to housing needs and is impacted by shifts in population, family size, economic conditions, and government policies. Industrial real estate, especially logistics properties, is witnessing substantial growth in Australia. The value of industrial property is surpassing office property values due to the surge in e-commerce demand. Annual rental growth for logistics properties has been robust, attracting global capital investments and driving down yields. The strategic importance of large distribution centres and infrastructure developments are key drivers in the industrial property segment.

By Business Insights

The sales segment accounts for a significant market share as it benefits from both owner-occupiers and investors looking to capitalise on property appreciation, particularly in major cities like Sydney and Melbourne where demand remains high and influences Australia real estate market dynamics and trends.  Many investors are further actively seeking residential properties as a means of generating rental income and capital growth. This interest in property investment drives sales volumes, as investors purchase homes not just for personal use but also as part of their investment portfolios.

Australia Real Estate Market Regional Insights

New South Wales Real Estate Market Trends

New South Wales (NSW) remains a dominant force in the market, particularly driven by Sydney's robust property landscape. Despite facing challenges such as high interest rates and affordability issues, the demand for housing continues to outstrip supply, impacting the Australia real estate demand forecast. The median house price in Sydney has seen fluctuations but remains around USD 1.2 million, reflecting its status as a sought-after location.

Victoria Real Estate Market Opportunities

Victoria's real estate market is characterised by a significant demand-supply imbalance, particularly in Melbourne, where rental prices have surged by 5% in early 2024, the highest quarterly increase in 17 years, which can increase the Australia real estate industry revenue. The Victorian government has introduced policies aimed at increasing housing supply, such as a 12-month reduction in stamp duty for off-the-plan units and the identification of 50 new activity centres to streamline development approvals.

Queensland Real Estate Market Growth

Queensland's property market accounts for a significant Australia real estate market share and is experiencing robust growth, with house prices rising by 2.07% and units by 5.09% over the first quarter of 2024. The state's appeal is bolstered by its relatively affordable housing compared to other states and a strong influx of interstate migrants seeking lifestyle changes. The Real Estate Institute of Queensland reports that units have increased by 10.2% annually, highlighting their popularity among buyers.

Western Australia Australia Real Estate Market Dynamics

Western Australia (WA) is currently experiencing a dynamic real estate market characterised by significant growth in property values and strong demand. As of late 2024, Perth's median house price is projected to reach approximately USD 750,000, reflecting a remarkable increase of 25% over the year, which increases Australia real estate market opportunities. The state government’s initiatives, such as the Vacant Property Rental Incentive Scheme, aim to alleviate housing shortages by encouraging property owners to rent out their homes. Despite challenges like rising interest rates and construction costs.

Innovative Startups in Australia Real Estate Market

Startups are leveraging AI and big data to provide insights throughout the property development process, helping stakeholders make informed decisions regarding feasibility and compliance. Additionally, the Australian Proptech Summit serves as a platform for these startups in Australia real estate industry to showcase their solutions and connect with industry leaders. The summit highlights the importance of technology in navigating evolving tenant expectations.

Downsizer

Downsizer is an innovative startup that operates at the intersection of FinTech, PropTech, and InsureTech. Founded in 2016, the platform is designed to assist senior property owners in Australia who wish to transition to a new home without selling their existing property or depleting their savings. It allows users to acquire new properties with zero cash deposits by enabling them to back a deposit bond using the equity from their current home. 

Archistar

Archistar, founded in 2019, is a PropTech startup that leverages AI and machine learning to streamline the property development process. The platform offers tools for feasibility analysis, site selection, and compliance checks, helping developers make informed decisions quickly. By integrating data analytics into real estate development, the company enhances efficiency and reduces risks associated with property investment.

Competitive Landscape

Market players are engaged in acquisitions to expand their real estate, enter international markets, and stay ahead in the competition. Companies in Australia real estate industry are actively adapting to changing economic conditions and consumer preferences, focusing on various strategies to drive growth and meet demand. Additionally, real estate companies are leveraging technology to improve customer engagement and streamline transactions. The use of digital platforms for property listings, virtual tours, and online auctions has become more prevalent.

Key Industry Players

Hauss Pty Ltd.

Hauss Pty Ltd. also referred to as Haas Investments Pty Ltd, is a foreign-owned proprietary company based in Australia, primarily engaged in hop growing and marketing services. Haas Investments derives its revenue from the production and marketing of hops, which are essential for the brewing industry. 

The Agency

The Agency is an innovative real estate firm based in Sydney, Australia, that aims to redefine the traditional real estate agency model. The company operates both in-store and online real estate services across the country, providing a comprehensive platform for buying, selling, and renting properties.

McKean McGregor Pty Ltd.

McKean McGregor Pty Ltd. is a well-established, locally owned real estate agency based in Central Victoria, Australia, with over 100 years of experience in the industry. Founded in 1911, the company has built a strong reputation for providing personalised customer service across various sectors, including residential and commercial real estate.

Major market players are Harris Real Estate Pty Limited, McGrath Limited, eXp Australia Pty Ltd., CBRE Pty Limited, and Luxury Real Estate Agents, among others.

Recent Developments

November 2024

As per the annual National Share Accommodation Survey (NSAS) conducted by Flatmates.com.au, which gathered responses from over 8,700 individuals nationwide, the expense associated with renting a single room in a shared house within urban areas, such as with Avalon Beach in Sydney has increased by as much as 90 per cent over the past year.

November 2024

The sale of a three-bedroom home at 138 Boundary Rd, Thomson, for USD 500,000 marks a significant milestone for new buyers looking to enter the property market in Geelong. This transaction reflects the ongoing demand for housing in one of the region's most tightly held suburbs.

Australia Real Estate Market Report Snapshots

Australia Real Estate Market Size

Australia Real Estate Companies