For homeowners, investors, and anyone keeping a pulse on Australian real estate, March 2024 has brought some significant shifts in market conditions. After a relatively subdued 2023, the first few months of 2024 have seen a reinvigoration of activity, particularly in capital cities. Let's dive into the key trends defining the current landscape:

A surge in new listings

As the latest national real estate data from realestate.com.au's PropTrack Listings report for February shows, Australia's property market accelerated sharply in February, with an impressive 16.6% year-over-year increase in new listings coming onto the market. This spike was primarily driven by the capital cities which experienced their busiest February for new listings in over a decade.

Source: PropTrack Listings Report, Feb 2024

Sydney and Melbourne led the charge, each recording well over 30% more new listings compared to February 2023 levels. In fact, Sydney saw its highest number of new listings for a February since 2012, while Melbourne's figures were the highest since at least 2010.

This resurgence represents a marked turnaround from the lull experienced throughout much of 2023 when listing volumes were relatively muted in the wake of 2022's downturn.

Regional areas steadier but rising

While capital city markets stole the spotlight, regional areas around the country also contributed to February's year-over-year gains, recording a 7.8% increase in new listings nationally. However, the scale of this rise was more muted compared to the capitals.

Certain regional markets stood out more than others. Regional NSW and Victoria continued their stretch of improving levels of new stock coming onto the market in recent months. In fact, total listings in regional Victoria have almost returned to average levels seen over the past decade after being down more than 60% at the market's lowest point in mid-2021.

In contrast, new listings remained relatively subdued across regional Queensland, though February did mark the first year-over-year increase since August 2022 - an early sign that momentum may be starting to build.

Overall housing stock on the rise

Looking at the total pool of properties listed for sale, February saw a strong 12.3% month-over-month increase across Australia. Every state and territory recorded rising listing volumes over the month.

In Sydney, Melbourne, Canberra and Hobart, total listing counts are now solidly above their 10-year averages for this time of year. However, markets like Brisbane, Perth and Adelaide still have total listing volumes sitting around 40% below decade averages, indicating there is still some ground to make up in those cities.

The supply & demand dynamics

So what economic forces catalysed this early-2024 revival in market activity? A few key factors have realigned to create increased momentum:

Low Unemployment: Despite predictions of rises, unemployment has remained low by historical standards, underpinning household financial security.

Strong Population Growth: Australia continues to experience solid population growth from natural increases and migration, driving long-term housing demand.

Tight Rental Market: With rental vacancies near record lows in most areas, this scarcity incentivises some renters to pursue homeownership when possible.

Interest Rate Expectations: Perhaps most importantly, markets have priced in expectations that the RBA will start cutting interest rates in the second half of 2024 as inflation pressures subside more rapidly than initially forecast.

This renewed confidence in the interest rate outlook has clearly encouraged more homeowners to engage with the market, whether selling to upsize, downsize, or access accumulated equity.

The rental affordability crisis

Of course, no discussion of Australian real estate in 2024 would be complete without addressing the dire state of rental affordability plaguing most of the country. The recently released PropTrack Rental Affordability Index painted a sobering picture - the worst conditions for renters in at least 17 years.

Propelled by years of surging rents that have outpaced wage growth, rental affordability is most strained in New South Wales, Tasmania and Queensland according to the index. By comparison, Victoria emerges as the nation's most affordable rental market, though conditions there have still deteriorated sharply from pre-pandemic levels.

The report highlights how severely this affordability crisis impacts lower-income households least capable of absorbing rising housing costs. In the near-term, boosting Commonwealth Rent Assistance has been identified as a potential stop-gap to ease the burden on vulnerable renters.

However, the crux of the issue remains a chronic lack of available rental properties and housing stock in general. With national vacancy rates scraping record lows and a targeted 1.2 million new homes needed over the next 5 years to meet demand, housing supply represents both the biggest challenge and solution to alleviating Australia's rental stress.

Looking ahead

As we move deeper into 2024, real estate markets nationally appear to have re-gained their footing after 2023's relative lull. Buoyed by favourable economic conditions, bolstered buyer and seller confidence has catalysed a fresh wave of activity to start the year, most prominently across capital cities.

However, this renewed momentum also throws into stark relief the mounting challenges around rental affordability that will need to be addressed through a combination of short-term policies and an unwavering long-term commitment to increase housing supply.

For homeowners, investors and prospective buyers alike, 2024 is shaping up to be a pivotal year in Australian real estate.

As always, the team at Little Real Estate is here as a trusted advisor to help you navigate this evolving landscape. If you'd like to discuss taking advantage of the current conditions or simply have questions, reach out to schedule a free property appraisal with one of our knowledgeable local agents today.