Premium market in recovery: PEXA

PEXA’s most recent Property Insights Report has found that residential settlement volumes over $1 million mostly increased across the eastern states in the first quarter of the financial year 2024 when compared to the prior quarter.

The report found that volumes in the $1.5 million and $2 million price bands rose by 5.8 per cent and 11.6 per cent (respectively) in NSW and 3.6 per cent and 4.5 per cent in Victoria.

Sales settlements at the lower end of the market (sub-$500,000 price band) decreased between 9–13 per cent in the eastern states, which were driven by lower vacant land settlements, resulting in overall volumes dropping 4.4 per cent compared to the June 2023 quarter and down 5.2 per cent on the September 2022 quarter.

Head of research at PEXA, Mike Gill, said: “The higher end of the market is showing strong signs of recovery driven by lower property stock availability during the winter months and increased confidence as buyers factored in the previous pause in interest rate rises.”

In terms of a boarder outlook, non-major bank BOQ’s chief economist Peter Munckton said that the average Australian house price growth is likely to be lower in 2024 compared to 2023.

According to Mr Munckton, the lack of new housing supply puts a floor as to how far house price growth can slow, however, if interest rate cuts take place earlier than anticipated, house price growth will be stronger.

“Stronger house price growth is likely in 2025 as interest rates are reduced and the economic outlook improves,” he said.

“I expect that biggest rise in standalone house prices in 2024 will be in Melbourne and Perth, the two cities that I think currently provide best value (such as comparing rental yields with the level of long-term interest rates).

“Melbourne price performance last year was modest by capital city standards. The Perth market is only now recovering from the fallout from the end of the mining boom. Perth housing prices will also be supported by constrained new housing supply, as well as WA having the second-lowest state unemployment rate.”

Additionally, the latest House Price Report for the December quarter released by Domain has found that Australia’s housing market has made a full recovery from the 2022 downturn, with both combined capital house and unit prices closing out 2023 on record highs.

[RELATED: Housing market ‘fully recovered’ from 2022 downturn: Domain]