As we move deeper into the final quarter of 2024, the Australian property market continues to showcase its dynamic and varied landscape as shown in recent data from CoreLogic. While major cities like Sydney, Brisbane, Perth, and Adelaide remain central to investment conversations, the opportunities and challenges within each region are becoming increasingly apparent. For property investors, staying ahead requires not only understanding these shifts but also seizing opportunities as they arise.

Sydney’s Steady Ascent

Sydney remains a strong contender for capital growth, with house prices projected to increase by around 8% over the next year. By mid-2025, we could see a significant jump in median house prices, driven by ongoing demand and limited supply. This could translate to an additional $130,000 to $132,000 on the price of an average home.

However, for first-home buyers and investors alike, affordability continues to be a hurdle in Sydney. The city’s property values, particularly in prime areas, remain out of reach for many. As a result, savvy investors may look towards more affordable cities where growth potential is equally promising, if not more so.

Perth’s Boom: A Sustainable Growth Path?

Perth’s property market continues to defy expectations, posting an impressive 34.8% increase in home values over the last two years. While this growth has drawn in waves of investors, there are questions surrounding its long-term sustainability. Investors from the eastern states have been a driving force, but what happens when local buyers are left to sustain these high prices?

That said, Perth’s fundamentals remain strong, with a projected growth of 10% over the next year. Local economic factors, such as continued population growth and increased demand for housing, could keep the market buoyant. Still, caution is advised as rising interest rates and affordability pressures might temper growth.

Brisbane: Long-Term Growth Champion

Brisbane, on the other hand, remains one of the most attractive markets for long-term investors. With the 2032 Olympic Games in sight, infrastructure investment, population growth, and favorable market conditions continue to position Brisbane as a future growth hotspot. Investors looking for strategic, long-term plays are increasingly drawn to the city’s potential, with experts predicting an 8% rise in property values over the next year.

The fundamentals for Brisbane are strong, making it a prime target for both seasoned investors and those just starting their property journey. With population migration from southern states continuing, Brisbane offers a balanced mix of affordability and growth prospects.

Adelaide: The Quiet Achiever

Adelaide has quietly cemented itself as one of Australia’s top-performing property markets, with a predicted 9% rise in home values for the next 12 months. Over the last year, the city has seen property values surge by 14.5%, and while the pace of growth is easing, the underlying fundamentals remain solid. For those seeking stability and consistent returns, Adelaide offers an attractive alternative to the eastern seaboard capitals.

While Perth, Brisbane, and Adelaide show strong prospects, the broader national picture points to a slowdown in momentum. CoreLogic’s latest data reveals that housing values across Australia rose by just 1.0% in the September quarter, the lowest quarterly rise since March 2023. Cities like Melbourne and Canberra even recorded declines, down 1.1% and 0.5% respectively.

This easing of growth is partly due to seasonal factors, such as an increase in listings, and affordability constraints as interest rates continue to weigh on borrowing capacity. Auction clearance rates have dropped, homes are taking longer to sell, and vendor expectations are softening, all pointing to more balanced market conditions ahead.

Affordability and Market Segmentation

A key trend to watch is the diverging performance between lower and upper quartile properties. Lower-priced homes have seen the strongest gains, rising 12.4% over the past year, compared to just 3.8% for higher-end properties. For first-time buyers and investors focusing on affordability, this segment presents continued opportunities, especially in cities like Brisbane and Adelaide.

Unit values, too, have outperformed house values in several capital cities, indicating a shift in buyer preferences as affordability becomes a more significant issue.

What’s Next for Investors?

As we move into the summer months, the rise in new listings is likely to provide more choice for buyers, particularly in the lower end of the market. While growth is expected to moderate in key cities, the fundamentals driving Australia’s property market remain strong: population growth, limited supply, and favorable long-term economic prospects.

For investors, the strategy remains clear—focus on markets with strong fundamentals, such as Brisbane and Adelaide, where long-term growth potential is evident. Those with a higher risk tolerance may continue to explore Perth, but it’s important to keep a close eye on local market dynamics as investor demand cools.

With more balanced market conditions on the horizon, there’s never been a better time for strategic, informed investment decisions. Whether you’re a seasoned investor or just starting out, now is the time to plan for the opportunities 2025 may bring.