Rental Squeeze, Price Surges & a Surprising Tourism Boom – Here’s the Wrap

Hi, Andrew Bell with you once again. You may have seen the recent headlines about some restructuring taking place here at The Ray White Bell Group. I’ll be discussing that in more detail in the next edition of our eNews.

As many of you know, I’ve served as a Board Member of the Real Estate Institute of Australia for several years. Our role is to continually analyse the real estate market and provide strategic advice—particularly to the Federal Government—on housing policies.

No one has a better understanding of the real estate landscape than the practitioners who are working on the ground every week across Australia. With a Federal Election now underway, we’ve ramped up our recommendations to all political parties in the hope of influencing policy outcomes.

Recent research shows that the national median house price rose by 0.7% in the final quarter of 2024, and by 5.2% over the year, bringing the capital city median to $1,058,442.

Given that over one-third of Australians rent, rental trends are equally important. Rents for three-bedroom dwellings increased by 0.2% over the December quarter and 6.7% annually, reaching $624 per week. Two-bedroom dwellings rose by 0.3% in the quarter and 7.4% over the year, now averaging $626 per week.

Of course, rents are driven by supply and demand. As supply continues to fall, tenants have adapted. Where couples may once have rented a two-bedroom apartment alone, many are now sharing larger homes with other couples to reduce costs. As a result, we’ve seen some easing in rental demand, leading to increased vacancy rates in Sydney, Melbourne, and Perth. Meanwhile, rates remain stable in Brisbane and Adelaide, and have decreased in Canberra, Hobart, and Darwin.

To give you perspective, a 3% vacancy rate is traditionally considered a balanced market—relieving rental growth pressures and creating a fairer environment for both landlords and tenants. Currently, the national average sits at just 1.8%, highlighting that demand still far outweighs supply.

An interesting insight from CoreLogic’s Pain & Gain Report reveals that Australian homeowners are seeing record profits when selling. The average gain hit $306,000 in the December quarter, with 94.8% of property resales resulting in a profit—the highest median gain since CoreLogic began tracking resale data in the mid-1990s.

That said, the percentage of profitable sales dipped slightly from 95.1% the previous quarter, reflecting a minor softening in home values toward the end of 2024 following a long period of interest rate rises.

Among capital cities, Brisbane topped the charts, with 99.1% of properties selling for more than their previous purchase price. Total resale profits for the quarter reached $35.6 billion, up from $35 billion previously. The average holding period for profitable sales was 9.3 years, compared to 7.6 years for loss-making sales. These figures—based on 95,300 transactions—once again underscore that real estate remains one of the safest investments.

A few quick updates to finish:

CPI eased to 2.4% in February. While the tug-of-war continues between headline and core inflation, pressure is building on the RBA for another 0.25% rate cut. It’s unlikely we’ll see any movement during an election campaign, so any adjustment may be delayed until June. In the meantime, we’ll be closely watching inflation data, which has been particularly volatile over the past year.

The Federal Budget offered little for the housing sector. While politically attractive, tightening foreign buyer restrictions in 2025 could actually hurt the rental market by reducing investor-driven supply. Many developers rely on foreign pre-sales to fund projects, so capping this pool too harshly could significantly impact housing construction. While placing a cap per project makes sense, blanket restrictions do not. Unfortunately, there’s little else in the Budget to suggest any meaningful support for housing in the near term. Hopefully, the election campaign will bring sharper focus to this issue.

And finally, a huge congratulations to the Gold Coast. According to Tourism Research Australia, we hit two major milestones in 2024: a record $8.1 billion in visitor spending and a record 13 million total visitors. The Gold Coast outperformed both Queensland and the nation in expenditure growth. NSW led domestic tourism with 1.3 million visitors, and surprisingly, the Sunshine Coast delivered 249,000 visitors—up from 185,000 last year. From overseas, New Zealand remained our top international market, increasing from 201,000 to 222,000 visitors.

Following Cyclone Alfred, there’s still much to do. The cyclone prevented over 95,000 travellers from arriving while the airport was closed, and many others changed their plans. A major tourism campaign is now underway to boost numbers for Easter and the winter season.

Don’t forget to book your spot at the Business Meets Sport Lunch on Friday, 30th May at The Star Casino. It’s a sell-out event every year, featuring interviews with top sporting identities and our Local Billionaire Series, where we showcase business leaders who built multi-billion-dollar empires from humble beginnings. Details are now on screen to secure your seat for what promises to be a fantastic afternoon.

See you in a fortnight!

Andrew Bell, OAM
Chairman
The Ray White Surfers Paradise Group