The property market has experienced an unusually high level of activity in recent months, marked by increased listings and sales in numerous major cities.
PropTrack's data show that buyers were out in force in August with the number of highly engaged buyers per listing up 14.5% across the combined capital cities.
Now that Spring has officially arrived, where will prospective property buyers choose to focus their attention?
Top suburbs for first-home buyers
According to email inquiries sent to agents via realestate.com.au in August, first-time homebuyers displayed the highest interest in condominiums located in Melbourne CBD, Parramatta in Sydney, and Brisbane City.
According to Karen Dellow, Senior Data Analyst at PropTrack, high property prices and the numerous interest rate rises experienced over the previous year have made it more challenging for first-home buyers to afford a property, especially a house.
She further said:
"Of the top 20 suburbs for first-home buyers, 60% had the highest enquiries for units.
The closer the suburb is to the centre of a city, the less affordable properties become, forcing first-home buyers to lower their sights on units rather than houses.
More first-home buyers also enquired about units in South Yarra and St Kilda in Melbourne, and Epping in Sydney.
However, those buyers looking for an affordable house have had to set their sights further away from the city, in suburbs such as Tarneit and Point Cook in Melbourne and Forest Lake in Brisbane.
It is telling that there are no Sydney suburbs on the list for the highest house enquiries, as it is the least affordable of all the major cities, and first-home buyers have been priced out of the market."
Top suburbs for investors
PropTrack also noted that in recent months, investors have been returning to the market, although not at levels seen at the start of 2022, when new lending to investors was at its high.
Based on REA's data, the most in-demand suburb, according to the number of email enquiries was Surfers Paradise, where investors were looking for units. Melbourne and Brisbane City were also top of the list.
Ms Dellow commented:
"For investors, many of the top suburbs were also the same for first-home buyers, suggesting that affordability is important.
However, whereas the top suburbs for first-home buyers were mostly in metro Victoria, for investors, the hotspot is Queensland, where 60% of the top suburbs are situated.
Most of these suburbs are in tourist-heavy regions, such as Broadbeach, Port Douglas, Mooloolaba, and Airlie Beach, suggesting that investors may be looking for properties to put on the short-term rental market.
These suburbs will likely continue being popular throughout spring and the foreseeable future, especially as the cost of buying a house has increased considerably."
A final note for investors
As I always say, when it comes to property investment, the focus should be on investment-grade properties in A-grade locations.
Never follow a trend or buy in hotspots or growth areas because these won’t give you the long-term growth that you’re looking for.
I’m talking about areas and properties which hold their value over the long term, rather than benefit from an uptick in demand.
These lists of suburbs are interesting, but not necessarily where I'd recommend investing
I see the current market offering a window of opportunity for property investors with a long-term focus.
You see…we are at the beginning of a new property cycle, something that doesn’t happen very often.
Not that I suggest you try and time the market- this is just too difficult, and in truth, you’ve missed the bottom which occurred in early 2023.
But if the market hand you an opportunity like this why not take advantage of it.
Taking advantage of the upturn stage of a new property has created significant wealth for investors in the past.
Moving forward, demand is going to outstrip supply for some time to come as we experience record levels of immigration at a time when we’re not building anywhere as many properties as we require.
At the same time the cost of construction of delivering new dwellings will keep increasing not only because of supply chain issues and the lack of sufficient skilled labour but because builders and developers will only commence new projects if they are financially viable and currently new projects will need to come on line at considerably higher prices than the current market price,
Of course in due course consumer sentiment will rebound when it becomes clear that inflation continues to fall and interest rates have peaked.
At that time pent-up demand will be released as greed (FOMO) overtakes fear (FOBE - Fear of buying early), as it always does as the property cycle moves on.
And strategic investors will take advantage of the opportunities our property markets offer over the next couple of years maximising their upsides while protecting their downsides.
We are also going to be experiencing a prolonged period of strong rental growth - the rental crisis will only worsen further, with no end in sight.
