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10 insights into the investment property market
Insurance insights

10 insights into the investment property market

01 Feb 2024 9 mins read

In recent news, median rents hit an all-time high, the housing market regains all losses from 2022 and is set to reach a record high, investors return to the market but are wary of interest rates, vacancies rise slightly, building activity remains subdued, and disputes between landlords and tenants make the news.  

Each month we pull together 10 insights impacting the investment property market. Read on for this month’s instalment… 

1. Median rents highest on record. In December 2023, median national rents increased to $601 per week – a record high, according to CoreLogic. This equated to median annual rent of $31,252, an annual increase of 8.3%. The median had increased markedly from $437 per week in August 2020, pushing annual rent values up by more than $8,000 in that time. CoreLogic also noted that rent value increases had outpaced wage and income rises at the national level, with the portion of gross median household income required to service median rent rising from 26.7% of income in March 2020 to 31% in September 2023.

2. Rents continue rising. Data from MyHousingMarket showed the median weekly asking rent for houses in December 2023 was $760 in Sydney, $590 in Melbourne, $610 in Brisbane, $600 in Adelaide, $650 in Perth, $560 in Hobart, $683 in Darwin and $680 in Canberra. For units, median weekly asking rents were $750 in Sydney, $550 in Melbourne, $630 in Brisbane, $475 in Adelaide, $580 in Perth, $460 in Hobart, $555 in Darwin and $550 in Canberra. Capital city asking rents rose 1.3% in January 2024 to a median of $702 per week – houses were $815 p/w and units $603 p/w – according to SQM Research.

3. Housing market has fully recovered from 2022 downturn as property prices hit new highs. Australia’s housing market fully recovered from the 2022 downturn, with combined capital house and unit prices ending 2023 at a new record, according to Domain’s House Price Report December Quarter 2023. The median house price for the combined capital cities ended 2023 at $1.094 million, which was 2.1% up on the September 2023 quarter. Combined capital city unit prices also rose, with the median price at $638,372, which was up 2.3% on the September 2023 quarter.

4. Vacancies ease slightly. National vacancy rates increased 0.02% to 1.3% in December 2023, according to SQM Research. The total number of rental vacancies Australia-wide was 39,797 residential properties. The number of new rental listings in December 2023 was 20.7% lower than the ten-year average for the month. New rental listings throughout the capital cities were 5% lower over the year in December 2023 and were 3.4% lower in regional markets. Compared to the December decade average, capital city new listings were 20.4% lower and regional market new listings were 21.4% lower. 

5. Money matters. According to research from Compare the Market, almost 40% of Australian home owners are planning to sell a property within the next five years, with nearly one in five citing financial pressures as the reason. Data from Finder revealed 35% of mortgage holders struggle to pay their home loan. Research from Canstar found for the average income, a solo borrower has seen their borrowing capacity fall since April 2022 by $137,000 and, likewise, a double-income couple’s budget has been depleted by $331,000.

6. Investors slowly returning to the market. Data from the ABS showed the number of new loans to investors rose 1.9% to $9.72 billion in November 2023, up 18% compared to the previous year. REIA welcomed the return of investors to the market, saying it was a “relief”. API’s Property Sentiment Report Q4 2023 found 35% of investors believed Queensland was the state with the best investment prospects. The report also found 21% intend to buy an investment property in the next 12 months, while 30% cited interest rates as a deterrent to investing.

7. Investor news bites. Airbnb revealed what holidaymakers want in 2024. CoreLogic found 35% of Australia’s regional coastal markets recorded housing values at record highs at the end of 2023, with beachside suburbs of outer metro Perth recording the largest gains in value. Realestate.com.au’s Hot 100 identified the coastal suburbs expected to boom in 2024. Hotspotting wrote that apartments were becoming the property investment of choice for a growing cohort of Australians and 2024 was shaping up to be a year where they may significantly outperform houses. LJ Hooker Group revealed the best-value suburbs in each capital city in 2024. API Magazine identified the technology developments in 2024 set to shake up how buyers find the types of properties that will make good investments, as well as how properties are managed and transacted.

8. Building activity remains subdued as construction costs rise. Figures from the ABS showed the number of building approvals rose 1.6% (seasonally adjusted) in November 2023. The number of private sector house approvals fell 1.7% to 8,506, while private sector dwellings excluding houses rose 6.7% to 5,856. The value of new residential building fell 2.0% to $6.33 billion. The Housing Industry Association observed that “the low volume of building approvals throughout 2023 will see the volume of homes commencing construction continue to slow this year”.  

9. Making headlines. A Sydney couple were ordered to pay their landlords $3,000 for vacating an inner-city property just four days into their lease due to a cockroach issue, Domain reported. ACAT ordered a landlord to compensate a tenant $5,714 for “loss of amenity” due to a longstanding mould problem, reported Real Estate Business. Ninenews.com.au reported on a number of cases where tenants took their landlord to tribunal in 2023 and won. REIQ called for an urgent crackdown on dodgy backyard rentals. Perth retained its title as the strongest property market in Australia, with house prices up 15.3% over the past 12 months, according to Ray White’s January House Price Report. For the first time, South Australia was the country’s best performing economy in the December 2023 quarter, according to CommSec’s State of the States report.  

10. On the radar. Melbourne ranked 20th and Sydney 31st in Time Out’s 50 best cities of the world 2024 (New York topped the list). Sydney ranked 10th and Melbourne 17th for the number of millionaires, according to Henley & Partners’ Wealthiest Cities Report 2023. According to a study conducted by InsureandGo, 71% of adults under 30 have said they’re planning on putting their money towards travel, rather than property, in the next 12 months. Elite Agent reported a new app that aims to increase price transparency in the Australian property market launched.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions. 

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