Category
3 min read

MUST READ: Australian Property Prices Hit ALL-TIME HIGH!

Australian property prices have reached historic highs, presenting strategic investment opportunities amid record-breaking growth despite economic challenges.

Written by
Ravi Sharma
Published on
June 14, 2024

Table of contents

Interested? Book a call
book a discovery call

You should probably not take any advice from anyone online including myself….

EXCEPT on this one occasion, I am going to brag all I like.

The reality is, I was the only one coming out and suggesting in March 2020—in the depths of the pandemic that:  Prices will go on the BIGGEST property boom ever!


A couple of years later, we've seen it all play out.  However, what's more important is what happened in 2022 when we saw Sydney and Melbourne prices drop. That time, I also came out publicly and said:

Hey, this is the time that you want to load up!” 

If you follow me, you'll probably find the clues. In this article, we're going to check with questions: 

  • What’s happening with property prices?; and
  • Why are we breaking property records despite being in a per capita recession?  

We’re going to make sense of it all knowing where we're going to be placed in the next couple of years. 

Rate Cuts Are Less Likely?

Now, here's a beautiful article saying: Record-breaking house prices make early rate cuts less likely.

We all know that there's been much speculation over the last 18 months as to: When will the RBA start cutting rates?

As we entered 2024, we started to see inflation start dropping really quickly! 

What do I mean by this? This means that a lot of traders and analysts started suggesting we may have rate cuts in 2024.  Although still may be true in 2024, it might not happen as soon as many people think.

For instance, in the United States, they ACTUALLY thought the Federal Reserve (FED) would start cutting as early as March of 2024. Well, we are in April now and it hasn't cut yet. The reason is because: They are just adapting to the data that comes out.

Now, if you suddenly say: “Well, yes! We are definitely cutting on September 19th, 2024 despite whatever metrics come out," then you are going to do yourself a disservice. What they are effectively trying to do along with every other central bank, including Australia, is a soft landing.

So what does “soft landing” do?

Basically, what it is trying to do is: Bring down the plane to land—not to do anything else, but to land the plane safely, without losing too much. Because, there could be carnage like losing a wing, or an engine. (I'm definitely not a pilot or an engineer of any sort).

However, what I'm trying to say is that:

"The economy is just holding on."

What the central banks are also trying to do is say: 

“We can limit inflation as we go and land.”

“We can defeat the inflation problem without sending the economy into a recession.”

However, what's really happening is: Property prices are still going higher despite interest rates being so high.

Yes, if you are a boomer, you may come out here and say: “Interest rates are high? No, they are not. They are just in line with averages.”

Well...yes, you are right. But what we need to look at is the rolling 15 to 20 year period. The reason is: The markets are so different now compared to where they were 30 or 40 years ago.

So we need to adapt our mindset and when you come off the lows that we saw during the pandemic to where they are now, you’d see a lot of people taking out loans based on that interest rate.

So when we're saying: Interest rates are high.

It is relative to that period when most people were taking out loans. So hopefully I've clarified that….

Economic Outlook

If property prices are increasing during a time when "everyone was supposed to be scared", then the market was supposed to be dropping, because everyone was calling for this massive crash (that even today people still call for).

This is why I'm so optimistic about where property prices are heading over the next 24 to 36 months!

Why? Well, you see, despite people calling for this massive crash, they don’t simply understand that:

There is not enough supply and there's way too much demand.

And, I'm sorry, but…if you are in a position where you and your friends are not able to buy, that does not indicate that the rest of the market can't do this.

At Search Property, our buyers agency, we have seen an increased amount of enquiries, as well as clients signing up wanting to buy. This has changed so much compared to 6 months ago when:

  • The conversations at that point have negative tones to it; and 
  • A lot of people were just negative in general, saying: “I don't know if interest rates are going to go higher.”

Now that we are seeing some stability, people NEED this to start increasing their confidence. That's why prices are rising so quickly and why some people are still sidelined.

You may be wondering why... Well, they simply can't enter the market because interest rates are so high.

So if interest rates do cut in 2024 or they cut in 2025 what do you think that means?

People who have been sitting on the sidelines, watching their friends and family potentially buying property, are now seeing prices go up. They come to my YouTube videos and say: “Oh my God! Another all time high! I can't wait to get in!”

Eventually, when can they get in, that is when the next phase of this cycle kicks in. 

It is not now….It is not thinking that the “market’s going to crash,” because everyone needs to think that it can never crash and when everyone thinks it's never going to crash is when it actually crashes. 

Right now, you could ask 10 different people and you'll get 10 different responses around where the markets are going to go. When 9 out of those 10 people think it's going to go one way, it usually goes the opposite way. 

That’s exactly what happened during the pandemic. This is why I was so confident about not just investing but investing in the right locations.  I knew that Perth was going to be the next one to take off, which is why: We went heavy with clients.

Although, those conversations were super interesting as there’s still a lot of rejection, I know that those clients are now thanking me. (If you're one of those, I praise you for your courage because now it's starting to pay off!!!)

Crunching the Numbers, Understanding Growth Trends

Let's look at this graph which shows the annual growth of all dwellings. Keep in mind some of this is going to be skewed with units as well as the houses and townhouses.

 

But what we have is: The national average for the last 12 months growing by 6.79%.

Who would have guessed that?!!

Capital cities have grown by 7.64%. Whereas, Regional areas have grown by 4.67%.

Now, what we can see is the largest amount of growth, happening in:

  • Brisbane
  • Adelaide 
  • Perth

This would play exactly in line with the 18.6 year cycle and that's one side of things where you see: 

  • Property prices increasing; and
  • People’s net worth increasing.

This gives you so many more choices such as:

  • Taking out some equity and buying some more property;
  • Taking out equity and invest in other things;
  • You can go on a holiday; and
  • Buy a new car.

Whatever you like to do is up to you!

However, this is where it gets so interesting….How mainstream media or at least articles that come out, paint such a different picture of what's actually happening. 

You get headlines like this: Will Generation Z ever own a home? The challenge of home ownership is particularly steep for Gen Z.

Now, this article makes renting sound so bad.  But, with renting, you get choice. What you could ultimately do is say: “Okay, I can have these things happen to me or I can do something about these things.”

So someone that has a victim mindset is going: “Oh my God! Everything’s the worst thing, and it's all happening to me!”

Or you can go: “Well, okay, sh*ts either going to happen, or I can make sh*t happen.”

So what you want to do is: Go and take accountability.

Long Term Success Planning

What you can do right now is: Know that it is so much harder to buy property today than it was 10 years ago. 

Okay, granted because affordability is a concern.  BUT, it was also a lot easier back then, given that you had different lending conditions. If you're aware of that and you think that trend is going to continue, then 10 years from now, it will become harder.

So you're probably going: “I need to do everything in my power to at least buy assets.”

However, it's not so much about buying your own home.  It is about investing in assets, which is the key here.

If I decide today, I'm like: “I really want this house but I can't afford it because it's $1.5 million. Oh well, that means I can't do anything. I'm just going to continue renting and it's going to be sad. I can't do anything about it.

But NO! What I COULD do is say: “Well, I don't need to buy that right now. What I can do is invest in things I can afford.”

Then, I'm investing, I'm still in the market. When I increase my wealth, bought in the right locations, I could probably grow faster here in this diversified place where:

  • I still have a choice;
  • I still enjoy my lifestyle; and 
  • Then I can go in and buy the dream home.

Now, that could mean you are debt-free. It could also mean: selling some of the  properties in the portfolio you’ve built up.

There are so many exit strategies!

If you're interested in knowing what exit strategies could suit you, then definitely contact Search Property. 

Understand What’s Next

Now, home prices across Australia have hit new highs. The median value of a home in the capital city shoots to: 

  • $832,000 

Month-on-month national home prices set new records growing by:

  •  0.34% 

Dwelling prices in capital cities increased by:

  •  0.4% 

 

And are now:

  • 7.64% higher than prices in March 2023; and 
  • A shocking 35.2% higher than in March 2020 

So, you might find that these numbers are slightly different from where I was looking at before. That’s because you're getting data from PropTrack and then you're getting data from CoreLogic, which are two different sources for research.

However, at the end of the day, it's somewhere between 6 and a half per cent to 7 and a half per cent. That is what the growth has been now. Obviously, a lot of the hype is going towards Perth and how it's the best place to be buying.

However, what you want to be doing is: “Yes, there might be some opportunities there and we are still picking up a lot of property there.”

However, it's also about: Starting to look around the corner and understanding what is next. Because if you can start positioning yourself to what is next, it means:

  • You’ve dealt with a lot less competition; 
  • You can get properties under market value; and
  • You can also start doing a lot more negotiation than other places. 

Now that is exactly what we're doing at Search Property.

So if you need any sort of help around going and getting into the market and executing it at speed.

Then get in touch with the Search Property team!

Disclaimer: Important Notice for Readers

By reading the content provided on this blog, you acknowledge and agree to the terms outlined in this disclaimer, binding yourself to its provisions unconditionally.

This blog presents information for informational, educational, and general non-advisory purposes only. It's important for you, the reader, to understand that the information provided does not take into account your specific personal, financial, or other circumstances. Consequently, we do not offer legal, financial, investment, or taxation advice, recommendations, or guidance. Before acting upon any information from this blog, you are strongly advised to consult with an independent professional, including legal, financial, taxation, accounting, or other relevant advisors, to verify the information’s relevance to your particular situation.

The information is provided in good faith, derived from sources believed to be reliable. However, we do not guarantee the accuracy, completeness, or applicability of the information to your individual circumstances, needs, objectives, or financial situation. The information may be selective and has not been independently verified. Therefore, it should not be the sole basis for any decision-making.

We expressly disclaim any liability for errors, omissions, or inaccuracies in the information, as well as any direct or indirect losses, damages, or expenses that arise from relying on our content, regardless of the cause, including negligence or other factors. Your engagement with this blog is entirely at your own risk.

Please be aware, we do not hold an Australian Financial Services Licence as defined by section 9 of the Corporations Act 2001 (Cth), nor are we authorised to provide financial services, and we have not provided financial services to you.
A drawing of a house on a black background.

It’s not too late to start

Contact us to start building today.