Buying your first home remains a strong aspiration in Australia but the pathways into the market are constantly evolving says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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The idea that buyers disappear when the weather cools down simply isn’t true – genuine buyers are active all year round. It’s only the uncommitted buyers or those researching the market that may not bother, says John McGrath, Chief Executive Officer of McGrath Estate Agents
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This month’s interest rate cut – the second for 2025 – is great news for buyers and owners alike. Not only does it reduce interest costs, the rate cut also raises the borrowing capacity of aspiring buyers, says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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A new report from Cotality, formerly CoreLogic, reveals more than four in 10 homes across the combined capital cities now have a median value of $1 million or more.
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Now that we know Labor has been returned, let’s review what this means for first home buyers, says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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Presentation is a critical part of the selling process and a stylist can offer an objective view on how to present your home in the most appealing way to buyers, says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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During my 40 years in real estate, I have witnessed the market adapt to change in many innovative ways says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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It used to be the case that people who were priced out of expensive capital cities would do a seachange/treechange relocate to an affordable satellite town within commuting distance for work.
For example, Sydneysiders would look north to the Central Coast or south to Wollongong, while Melburnians would look west to Geelong or Ballarat, or south to the Mornington Peninsula.
Today, seachanging and treechanging has broadened to city switching, with more people opting to move states to retain the buzzy city lifestyle they love in a smaller and more affordable capital city.
This trend accounts for a large part of the price growth we’ve seen in Brisbane, Adelaide and Perth over the past two years.
The city switching trend started after the COVID boom in 2021 and during the subsequent market correction in 2022. In 2023, home values in Brisbane, Adelaide and Perth rose by 13.1%, 8.8% and 15.2%, respectively. In 2024, prices continued rising by 11.2%, 13.1% and 19.1%, respectively.
Despite this strong growth, Brisbane, Adelaide and Perth still offer better housing affordability than Sydney and comparable affordability to Melbourne.
The latest CoreLogic data puts median house prices at $981,000 in Brisbane, $879,000 in Adelaide and $839,000 in Perth, compared to $1,473,000 in Sydney and $929,000 in Melbourne.
But it’s not just housing affordability that is driving people to relocate to Brisbane, Adelaide and Perth. If that were the only factor, the city switch trend would have started long ago.
Arguably, the biggest social change COVID brought about was the option for many people to permanently work from home. This meant people could live anywhere, and the city switching trend shows many people prefer cosmopolitan city living over a slower-paced regional lifestyle.
Population data released by the Australian Bureau of Statistics (ABS) last month shows all capital cites experienced growth in FY24. However, growth was strongest in Perth at 3.1%, followed by Brisbane and Melbourne at 2.7% each, then Sydney at 2%, Canberra at 1.6% and Adelaide at 1.5%.
Digging down into the numbers allows us to see the city switching trend at play.
The only two capital cities that recorded net internal migration gains (that’s the number of people moving there from another part of Australia less the number departing) were Brisbane and Perth. The largest net internal migration losses were in Sydney and Melbourne.
The ABS also noted that population growth was greatest in the more affordable outer suburbs of the capital cities and “was driven by people moving into these areas from other parts of Australia”.
But not everyone relocating to smaller capital cities are doing so because they can work from home. Some are moving there because strong economic growth has led to more jobs and higher wages.
CommSec’s latest State of the States report, published last October, found Western Australia had the strongest economic growth of all the states and territories for the first time in more than a decade, followed by South Australia and then Queensland. These cities also had the strongest job markets.
On top of that, average weekly earnings are highly comparable at $1,954 per week in Queensland, $1,857 in South Australia, $2,157 in Western Australia, $1,986 in NSW and $1,928 in Victoria, according to ABS data.
So, it’s a combination of cheaper housing, remote working, growing state economies, and equivalent or better pay that is driving more Australians to try small city living.
These city switchers get to enjoy many of the same lifestyle benefits and job security as they had in Sydney or Melbourne, but with cheaper mortgages and less traffic congestion.
By John McGrath, Chief Executive Officer of McGrath Estate Agents.
For decades, open plan has been the much preferred floor plan format, but times are changing as more families seek homes with multiple living spaces and separate rooms says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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People tend to adopt a ‘wait and see’ attitude around elections but in my opinion, the election date won’t make a difference to your sale says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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We are seeing good competition at auctions this Autumn, with the national combined capital city clearance rate holding above 60%, which is considered the benchmark for a balanced market.
Looking ahead, we’ll see a pause in market activity over the Easter school holidays in mid-April. In addition, with the Federal Election to be held in May, we’ll see fewer auctions scheduled for Election day (even though there is no reason to avoid election day!).
While the market is currently cooling across the board, it was interesting to see Sydney reverse the trend with an 0.3% median price rise in February after three consecutive months of falls.
The combined capital cities median price also went up by 0.3% after two consecutive months of declines, while the regional median continued its gradual but consistent upward trajectory.
The data tells us that prices are holding up pretty well even though market conditions have changed.
There is greater evidence of the market slowing down in the days-on-market (DOM) statistics.
Nationwide, it now takes a median 42 days to sell, which is up from 33 days a year ago, according to CoreLogic figures.
Along the East Coast, the time it takes to sell has lengthened in every capital city bar Canberra and every regional area bar regional South Australia over the past 12 months.
The current median DOM by city are: Sydney 48 days, Melbourne 51, Brisbane 27, Adelaide 36, Perth 19, Canberra 55, Hobart 56, Darwin 66. The median DOM by region are: NSW 62 days, Victoria 63, Queensland 35, South Australia 46, Western Australia 29, Tasmania 59, Northern Territory 98.
Several factors contribute to the length of time it takes to sell your home. Market conditions are one of them, and of course this is out of your control. But many factors are within your control. They include taking the time to choose your agent carefully and investing in high quality marketing.
So, don’t worry if your local market is weakening. There is plenty you can do to help your home sell within a satisfactory timeframe. Here are my three best tips.
1.Meet the market on price
Nothing will be more attractive to a buyer than an attractive price. Your agent will show you some comparable sales to help you understand local market values today. This will help you set an appealing asking price for private treaty, or a realistic price guide for auction (if allowed in your state or territory).
Setting the price is more of an art than a science. No two homes are identical, so you and your agent must compare your home to recent sales and adjust for any differences.
2.Quality marketing
Your marketing campaign must have broad reach to potential buyers, and must also inspire them to act and attend an open. Call in the professionals for great photography and persuasive copywriting.
3.Excellent presentation
The key to extracting a premium price for a property – in any location, at any time, in any market – is emotionally connecting a number of buyers to your home and creating competition between them.
The way to improve your chances of buyers falling in love with your home is superior presentation.
Don’t be offended if your agent suggests professional styling! The purpose is to present your home in its most marketable form to buyers. Universally appealing styling that helps buyers imagine themselves living there will enable more people to emotionally connect with your property.
Your home will receive the highest attention from buyers within the first 14 to 21 days of your campaign, so it’s crucial to get these three things right from the very start.
One of the great mistakes sellers make is setting the price too high, thinking they can simply lower it later if they need to. This damages campaigns from the start. You’ll never get those first 14 to 21 days back.
So, listen to your agent, look at the comparable sales, and meet the market on price to generate as much competition as possible. It’s competition that provides your best chance of a premium result.
By John McGrath, Chief Executive Officer of McGrath Estate Agents.
The National Housing Accord is a federal initiative designed to address Australia’s housing shortage, aiming to build 1.2 million homes over five years says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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Cyclone Alfred serves as an important reminder to all home owners and investors to keep your property insurance policies up to date to protect what are usually your biggest financial assets, says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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A new CoreLogic survey shows 63% of Australian adults own at least one property – either their own home or an investment, says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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With more than 2,500 homes nationwide going under the hammer each week early signs are very positive, with the national clearance rate hovering around the mid-65% mark in February. By John McGrath, Chief Executive Officer of McGrath Estate Agents.
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Australia’s housing landscape is changing as we try to keep up with population growth and help young buyers get into the market. Not enough dwellings are being built, with smaller housing lots and higher apartment towers among the solutions to address both lacking supply and the affordability crunch.
As discussed in the McGrath Report 2025, a freestanding house on a quarter acre block, or 1,012sqm, used to be the norm for family living in Australia. But this scenario is rapidly moving into the rear view mirror.
Governments are increasingly wary of the high costs of delivering new infrastructure and services to support large land releases for development on the city fringes, and more buyers are looking for low-maintenance and lifestyle-rich accommodation in existing urban areas.
This has increasingly required our cities to build more on less land.
In 2023, soft consumer demand and industry capacity constraints led to a 33% reduction in the number of urban fringe housing lots being released to the market, compared to the annual average across the previous decade. In addition, the average size of these lots dropped from 481sqm in 2014 to 414sqm in 2023.
This trend towards more efficient housing will only continue, with the NSW Government announcing plans to allow townhouses, terraces, duplexes and small apartment buildings across more residential zones, and the Victorian Government promoting fast-tracked and ready-made approvals for apartment buildings up to three storeys near train stations and key centres.
In line with the same trend, Australia’s suburbs are increasingly reaching for the skies, with more apartment towers being built to accommodate population growth and provide affordable options for home ownership.
Census data shows that in 2021, apartments comprised 21.6% of homes in Brisbane, Melbourne and Sydney. This compares to an 18.9% apartment share of all homes in 2011. Between 2011 and 2021, Brisbane experienced the greatest growth in new apartment dwellings (56.1%), followed by Sydney (43.4%) then Melbourne (26.7%).
This apartment surge has led to a dramatic change to the skylines of our East Coast capital cities, with an average apartment tower height of 13.6 storeys for all high-rise buildings built between FY15 and FY24.
In coming years, middle ring suburbs in these cities will challenge the traditional supremacy of inner ring suburbs when it comes to the skyscraper stakes. The average height of all proposed middle ring suburb towers is 17.7 storeys, compared to just 16.2 storeys in inner ring suburbs.
This is a reversal of the situation across the last decade from FY15 to FY24, when towers to an average of 14.7 storeys were built in inner ring suburbs, compared to just 12.7 storeys in middle ring suburbs.
Middle ring suburbs with the highest average proposed towers will be Sydney’s Parramatta (35.4 storeys), Melbourne’s Box Hill (23.2 storeys) and Brisbane’s Indooroopilly (12.5 storeys), according to McGrath Research.
A key issue, however, is that the supply of apartments has also not kept pace with demand, due to planning delays, high building costs and shrinking developer finance. The number of new apartments built in East Coast capital cities in 2023 was 60% below the annual average of 37,380 apartments built between 2013 and 2022, although there are signs that construction has been picking up momentum since this time.
As a result, in FY24, established apartment price growth outperformed house price growth in Brisbane, Melbourne and Hobart and recorded a national increase of 6.5%, according to CoreLogic data.
This scarcity of newly built apartments in recent years will likely continue to place upward pressure on apartment prices, as more buyers turn to this housing option.
This is despite the fact that building cost escalation eased in the first half of 2024, resulting in more homes coming on to the market in line with the National Housing Accord target to build 1.2 million homes by mid-2029.
Under the Accord, long overdue reform is finally injecting more flexibility into state and local planning laws around the country. It will take time for all these changes and their benefits to play out in the market. But hopefully we will see a meaningful increase in the supply of new homes within the next few years, which should go some way to tempering annual price growth to more sustainable levels over the long term.
By John McGrath, Chief Executive Officer of McGrath Estate Agents.
Prestige Australian waterfront residences are among the world’s most valuable and sought-after properties says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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Hobart has a reputation for being a vibrant food and culture destination, with a beautiful coastline and fascinating history. Now the Tasmanian capital may be about to earn another label – the home of a comparatively affordable housing market says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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Last year was a landmark year for Brisbane, with the Olympics host city briefly taking the silver medal position among Australia’s capital cities in the property price stakes, says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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A key reason for this is higher-for-longer interest rates, which continued to constrain buyers’ borrowing capacity.
This meant some buyers had to compromise on their ideal location or change their aspirations in terms of the size and type of properties they targeted.
The result was more demand in the most affordable suburbs and cities of Australia, with the best price growth in Brisbane, Adelaide and Perth.
Since the pandemic, millennial buyers seem more willing to move interstate and start a whole new life in exchange for much more affordable housing.
Two decades ago, buyers in high value markets like Sydney and Melbourne typically sought better affordability in areas further away from the CBD.
Over time, this has pushed up prices in outer ring suburbs to the point where these areas no longer provide enough of a saving for many young buyers.
So, they’re increasingly looking interstate instead, which is one of the reasons why Brisbane, Adelaide and Perth have enjoyed such significant price growth.
Reflecting this trend, Western Australia recorded the highest population growth in FY24 at 2.8%. This had a flow-on effect to home values.
CoreLogic data shows the best Australian suburbs for house price growth last year were all in Perth. Half of those suburbs had a median value below $661,000, which puts them in the lowest price quartile of the national market.
The top growth markets for apartments were in Perth, Brisbane and Adelaide, and each of the top 10 suburbs had a median price below $600,000.
Solid levels of first home buying and investor activity also contributed to high demand in the lower price quartile last year. Younger buyers and investors tend to target apartments, which have lower median values than houses.
Let’s take a look at the best growth suburbs in the East Coast capital cities and regions.
Best growth suburbs of 2024
In Sydney, CoreLogic data shows house prices rose by 19% in Bonnyrigg in the south west, 18.5% in Wiley Park in the inner southwest and 17.9% in Emerton in the Blacktown area. In regional NSW, the top three suburbs were all in the Richmond – Tweed area. House values rose by 26.1% in Coraki, 23.9% in South Lismore and 22.4% in Lismore.
In Melbourne, house prices rose by 5.2% in Balaclava in the inner city, 4.5% in Beaconsfield and 4.3% in Pearcedale – both in the city’s southeast. In regional Victoria, house values rose by 12.5% in Rochester in the Shepparton area, 11.3% in Red Cliffs in the north west region and 11% in Tatura, also in Shepparton.
In Brisbane, house prices rose by 24.8% in Leichhardt in the Ipswich region, 23.7% in Brisbane City and 23.6% in One Mile, also in Ipswich. In regional Queensland, house values rose by 35.9% in Rasmussen in Townsville, 35.6% in Toolooa in central Queensland and 34.6% in Barney Point in Central Queensland.
In Hobart, house prices rose by 9.2% in Moonah in the north region, 7.4% in Primrose Sands in the east and 4.7% in Risdon Vale, also in the north. In regional Tasmania, the top three suburbs were all in the state’s north west. House values rose by 16.3% in Parklands, 12.1% in Park Grove and 11.5% in Montello.
In Canberra, house prices rose by 12.6% in Whitlam in the Molonglo region, 8.1% in Gowrie in the south and 6.5% in Campbell in the east.
Looking ahead, buyer demand in the lower and middle markets is waning due to affordability challenges. The fact that interest rates did not change last year also impacted buyer confidence. This makes the first rate cut in 2025 very important for buyer morale.
The first cut will signal the beginning of a series of rate reductions, which should spur on buyers. We will likely see a spike in buyer activity with the first cut, and a more meaningful increase once we’ve seen three or four rate cuts.
By John McGrath, Chief Executive Officer of McGrath Estate Agents.
Now that inflation is within the Reserve Bank’s target band of 2-3 per cent, a February rate cut seems very likely according to both the Commonwealth Bank and ANZ.
But how would an earlier-than-expected interest rate cut affect the Australian housing market in 2025?
PRICE MOVEMENTS
An early interest rate cut could bring back some confidence to the market, particularly in cities like Sydney and Melbourne where activity has slowed.
It may lead to a quicker end to the downturn, with price declines in Melbourne potentially stopping and Sydney seeing price growth pick up again. Forecasts indicate price growth of about 0-3 per cent from a potential rate cut.
While one rate cut is expected to boost confidence and lead to slight price growth, the broader impact will depend on how many cuts follow. ANZ forecasts two rate cuts in this cycle, while NAB predicts five, with the first occurring in May.
BUYER ACTIVITY
Interest rate cuts could spur buyer activity, particularly after a series of reductions that provide significant mortgage relief. While an initial rate cut might lead to a spike in buyer interest, more meaningful activity is expected after three or four cuts.
LISTINGS
As buyer demand picks up, more sellers are likely to enter the market. Currently, auction clearance rates across Australia have softened, dropping from 70-75 per cent to 55-60 per cent in most markets.
However, there could be a lag as sellers adopt a “watch and wait” approach following the first rate cut, delaying listings until the market shows sustained improvement.
COMPETITION
The first quarter of 2025 could be an ideal time for buyers before increased competition and rising prices take hold. Several rate cuts could dramatically change the market dynamic, especially in areas with limited stock.
Competitive markets are expected to see heightened activity, with some regions experiencing intense demand due to undersupply. Predictions suggest growth in 20 out of 25 of Australia’s largest cities, with significant growth of 8 per cent or more in 11 cities. Townsville, for instance, is forecast to grow by 30 per cent in 2025, a figure that could rise further with earlier rate cuts.
GOVERNMENT SCHEMES
The Federal Government’s Help to Buy scheme, set to roll out nationwide this year, is expected to provide meaningful support for first-home buyers. However, as the program is capped at 10,000 participants annually, its impact on overall pricing will likely be limited.
Undersupply remains a key driver of price growth. Without significant progress toward the government’s target of building 1.2 million homes, property prices may remain elevated despite various government initiatives. Rate cuts could accelerate this trend, emphasizing the need for increased housing supply to address affordability challenges.
At the start of 2024, price growth nationwide strengthened across the lower price brackets as people made compromises says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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Many people dream of buying at the bottom of the property market, but how often does that truly happen? If you’re saving for your first home and banking on a sharp drop in house prices due to rising interest rates, you might need to adjust your expectations.
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We’ve now got this historically large generation of Baby Boomers reaching their 60s and 70s, and many of them are deciding to downsize or relocate now says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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Despite higher interest rates and cost-of-living pressures, there are a lot of first home buyers in the marketplace across Australia says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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The higher supply of homes for sale this Spring is taking some heat out of the market, according to the latest CoreLogic data says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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The Real Estate Institute of Queensland (REIQ) is urging the Government to adopt a more balanced and reasonable approach to the expansion of the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime, than proposed in the AML/CTF Regime Amendment Bill 2024. As it stands, the Attorney-General’s Department Impact Analysis estimates the ongoing annual cost of the regime at ~$2bn per annum for the property industry. Queensland’s property industry will absorb a whopping ~$250m of that cost per annum.
REIQ CEO Antonia Mercorella, who represented Australia’s real estate professionals before a Federal Senate Committee last week, emphasised the REIQ’s support for the regime’s objectives but raised significant concerns about the impact of the laws on small business and everyday Australians buying and selling property.
“We fully support the Government’s commitment to protecting the integrity of the Australian financial system,” Ms Mercorella said.
“However, the proposed framework doesn’t fully take into account the practical challenges faced by real estate businesses—namely the lack of resources and specialised expertise needed to meet these complex compliance requirements.
“Further, the cost of compliance is unlikely to be absorbed by businesses without impacting the end price for buyers and sellers, making everyday real estate transactions more expensive for Australians.”
Ms Mercorella pointed out that large institutions, such as banks, have dedicated teams of specialists and resources to manage AML/CTF checks, due diligence and reporting requirements.
“In contrast, most real estate businesses in Queensland are small, independent operations, often with fewer than five employees, and are not equipped with the expertise or systems necessary to meet the extensive AML/CTF obligations,” she said.
“The skills, knowledge and resources needed to undertake these tasks goes far beyond the reasonable scope of a real estate professional’s training and expertise and requiring them to assume this responsibility is highly inappropriate.
“We support a legislative framework that meets the regime’s objectives and places the appropriate burden on real estate professionals without causing significant impacts, costs and delays to the facilitation of property transactions.”
Ms Mercorella said the REIQ proposes a more collaborative, technology-based approach to compliance, suggesting the development of solutions that allow real estate agents, legal professionals, and financial experts (tranche 2 entities) to share and rely on information.
This model would streamline and enhance the compliance process, reduce duplication and keep costs down.
“We propose a solution where real estate agents play an active role in the AML/CTF process undertaking reasonable tasks that include verification of identity and suspicious behaviour monitoring and reporting,” Ms Mercorella said.
“Meanwhile, more complex and highly technical tasks, such as source of funds or source of wealth checks and Politically Exposed Persons (PEP) identifications, should be left to legal practitioners and accountants.
“We believe that this approach offers a more balanced solution, one that achieves the desired objectives of the AML/CTF regime without placing unreasonable expectations on real estate professionals or compromising the efficiency of property transactions.”
The REIQ remains committed to supporting the Government’s efforts to combat money laundering and terrorism financing, but insists that a more pragmatic, resource-supported approach be adopted to ensure the real estate sector can continue to operate smoothly and securely.
As we head into November, sellers may be interested to hear of new PropTrack data indicating this may be the best month to sell says John McGrath, Chief Executive Officer of McGrath Estate Agents.
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