House prices in Australia

House prices in Australia

House prices in Australia

House prices in Australia, like in many other countries, are influenced by a complex interplay of various factors. These factors can change over time and are subject to economic, demographic, and policy shifts. Below we discuss some of the most influential factors affecting house prices in Australia and some considerations for how they may continue to impact prices moving forward:


  1. Interest Rates: The Reserve Bank of Australia (RBA) sets the official cash rate, which influences mortgage interest rates. Lower interest rates tend to stimulate housing demand, as they make borrowing more affordable. In response to economic conditions, the RBA may raise or lower rates, impacting house prices. In the last 3 months we have seen rates held stable at 4.1%, this is no doubt leading towards more positivity with sentiment for home buyers of all types.


  1. Supply and Demand: The balance between housing supply and demand plays a critical role in pricing. Factors such as population growth, immigration levels, and housing construction rates can affect this balance. With a 900,000+ person boost to the Australian population expected over just the next 2 years, there is no doubt that this places pressure on an already short supply number and could create upwards pricing in the future. Following those two years the ABS have forecast a whopping 200,000 people increase in our population per year for decades to come.


  1. Economic Conditions: The overall health of the Australian economy, including factors like GDP growth, employment rates, and consumer sentiment, can impact people’s ability and willingness to buy homes. Unemployment rates have remained low for 2 years following lockdowns which is likely to lead to more housing activity in the near future.


  1. Government Policies: Government policies can have a significant influence on housing prices. For example, incentives for first-time homebuyers, tax policies (like capital gains tax and negative gearing), and zoning regulations can impact both supply and demand. Currently state governments are having a big impact on certain industries within the property landscape and will continue to contribute towards how various sectors perform.


  1. Foreign Investment: The level of foreign investment in Australian real estate can affect prices, especially in major cities like Sydney and Melbourne. Government policies regarding foreign property ownership can influence this factor. In recent times we have seen a huge decline in the performance of residential real estate in China, which has led to a new surge of international investors entering our markets again. This puts more pressure on local buyers to compete against cashed up investors.


  1. Urbanization and Infrastructure: Infrastructure development and urbanization trends can affect housing prices. Areas with improved transportation links, amenities, and employment opportunities tend to see increased demand and rising prices. Major arterial projects like the West Gate tunnel can have short term implications and medium term outcomes that support house owners. Following infrastructure investment can be wise if done correctly.


  1. Consumer Sentiment: Consumer confidence plays a role in the housing market. When people feel optimistic about the economy and their financial prospects, they are more likely to buy homes. This comes down to household savings, employment stability, state of the market and equity in their homes.


  1. Global Economic Factors: Australia’s economy is influenced by global economic conditions. Events like global recessions or financial crises can have spillover effects on the Australian housing market. Major events like war, natural disasters and stock market happenings can all affect the way that house prices fluctuate.


  1. Housing Affordability: The ability of average citizens to afford homes is a crucial factor. High prices relative to incomes can lead to decreased demand and potentially slower price growth. Since 1930, the cost of a house compared to your average income has changed dramatically. Hence the need for more affordability with homes and social housing.


  1. Speculation and Investor Activity: Speculation in the housing market, driven by investors looking for capital gains, can lead to price bubbles. Government policies aimed at curbing speculative activity can influence prices also.


Moving forward, it’s essential to keep in mind that the real estate market is dynamic, and factors influencing house prices can change over time. Economic conditions, government policies, and global events can all impact the housing market. Therefore, it’s advisable to consult up-to-date sources and experts in the field to gain a more accurate understanding of the current and future factors influencing Australian house prices. We always say that having a long term approach to investing in major areas with lots of driving forces is the way to go. Speculating with high risk property investment is not our approach and can lead to damaging outcomes.

To learn more about working with us, please book a time with our team on the link below.

Happy Investing,


Matt Ellul
Director – Buyfair Property Group

Book discovery session

Supply & demand in the property market

Supply & demand in the property market

Supply & demand in the property market

Supply and demand is a fundamental principle of economics that plays a crucial role in the property market.

Essentially, supply and demand refer to the balance between the quantity of a particular good or service that is available and the desire of consumers to purchase that good or service.
In the property market, supply refers to the number of properties available for sale or rent at a given time, while demand refers to the number of people looking to buy or rent properties. When the supply of properties is high and the demand is low, it can lead to a buyer’s market, where prices are generally lower and there is more negotiating power for buyers. Conversely, when the supply of properties is low and the demand is high, it can lead to a seller’s market, where prices are generally higher and there is more negotiating power for sellers.

There are several factors that can affect supply and demand in the property market. For example, an increase in the population of a particular area can lead to an increase in demand for housing, which can drive up prices. On the other hand, an excess of available properties or a decrease in population can lead to a decrease in demand and lower prices.

Economic conditions can also play a role in supply and demand in the property market. During times of economic prosperity, there may be more demand for housing as people have more disposable income to put toward purchasing a home. Conversely, during times of economic downturn, there may be less demand for housing as people have less disposable income to put toward a home purchase.

Recently, we have seen a sharp decline in building approvals. Yet, vacancy rates and employment remain at all-time lows. Could this cause a lack in supply for the next few years and drive prices up? That is the million-dollar question we need to ask ourselves.

In addition to these factors, the location of a property can also affect supply and demand. Properties located in popular or desirable areas may be in higher demand and command higher prices, while properties located in less desirable areas may be in lower demand and have lower prices.

Understanding how supply and demand works in the property market can be helpful for buyers and sellers, as it can provide insights into the state of the housing market and help them make informed decisions about purchasing or selling a property.

In addition to the factors mentioned above, there are also other factors that can impact supply and demand in the property market. For example, government policies and regulations can have an impact on housing prices. For example, if the government implements policies that make it easier for people to buy homes, such as by offering tax breaks to investors or first home owner grants, it can lead to an increase in demand for housing and higher prices. If the government implements policies that make it more difficult for people to buy homes, such as by increasing interest rates or increasing regulations, it can lead to a decrease in demand and lower prices.

Another factor that can impact these components is the availability of financing. If it is easy for people to obtain mortgages or other types of financing, it can lead to an increase in demand for housing and higher prices. On the other hand, if it is difficult for people to obtain financing, it can lead to a decrease in demand and lower prices.

Overall, there are many different factors that can impact supply and demand in the property market, and it is important for buyers and sellers to be aware of these factors to make informed decisions about purchasing or selling a property. Whenever the acquisitions team at Buyfair is assessing a property opportunity for our clients, supply and demand across all of the above elements is one of the key things we are looking at.

Property prices

Property prices

Property prices

When trying to understand how the property market is performing at any one time, there are a multitude of different elements we look at with the market and overall economy to get a feel of where we are at. And also, where it is that we are going.

I often get asked questions like “what is happening with property prices atm?” and “ why should I buy now when the market has turned?”. Which are very valid questions that anybody should be asking when playing within the property landscape.

What I try to understand before answering these questions is, how are we looking across the board. And with the information at hand, how could we expect prices to perform for the near, mid and long term future. When assessing the information, I am trying to get a feel of such things like;

  • Comparison of average income to median house prices
  • Population forecasts / Supply and Demand
  • Government stimulus
  • Interest rates

When I review the current market, I see a few key indicators that give me confidence of continued strength within property prices for the not too distant future and beyond. Of course, interest rates have stabilised (and dropped off a little) pricing for the time being, but how long these make an impact for is something I am not 100% sure on. I will say this, that the need for price relief is real, so this isn’t a bad thing that’s happening now.

I will also say this, you don’t just make money with property through price growth, so when prices drop – this generally means opportunity can be ripe for the picking. “be fearful when others are greedy, and greedy when others are fearful” Warren Buffet

There are many ways to make money with property. But traditionally there have mostly been four – do you know what they are?

Median House Prices to Income averages

When it comes to housing affordability, there has been some obvious shifts over the last 20 years. In 2000, average incomes in Victoria were $34,745, and the median house price was $280,000. This represents a house price to income average of about 8 times.

Average income – Victoria – 2000 = $34,745

Median House price – Victoria – 2000 = $280,000

The median house price in the year 2000 was circa 8 times the average income.


Now in 2022, we are seeing a median house price of $930,000 and an average income of $88,998. Which represents a multiple of circa 11 x income. Meaning it would take you an extra 3 years to pay off a home now (if no interest was applied).

Average income – Victoria – 2022 = $88,998

Median House price – Victoria – 2022 = $930,000

In the year 2022 the average income is circa 11 times the median house price


So, one of the key things we want to look at here is wage growth. Which has been quite stagnant for a number of years. But with unemployment being at the lowest it’s been EVER at 3.5%, can we expect wage growth to finally start picking up some slack and increasing?



The above graph would indicate that we can. As a reasonably sharp increase in wage performance is evident. I like the look of this graph as it means peoples earning capacity may rise in competition with rising interest rates.

If wage growth grows, whilst pricing drops off slightly, then these comparisons may close up to levels closer to where we were at over 20 years ago. This to me is a good sign that we are on the right track with property prices and should continue to see this increase for a long time to come.


Population Forecasts / Supply & Demand

The next key factor I usually look at, remembering that this article is focused on the macro environment, not micro. Is the population growth and forecasting for any one region we are looking to assess. There are several great ways that you can find this information, but I like to use the page as its very detailed and updated government reporting.


Currently Australia’s population sits at about 26,000,000 people (26M). By the year 2070, this will likely be a population of about 35M people. This is 9 more million people than we have in the country now. And guess what, they will all need jobs and roofs over their heads. Which is why housing will always play such a huge role in any developed nation with exceptional positioning for expansion. If you think about the size of our country, and how few people that live within it, I find it a little scary to think of where we could be in 50 years time and beyond. Look at the size and prices in places like New York, London and Hong Kong. The upside potential within our country is exceptional.

The below graph demonstrates how overseas migration is looking to perform over the next 10 years. Minus out departures and we are looking at an extra 200,000 people arriving on our shores every year for a long time to come. What we tend to see, is about 120,000 – 150,000 of these people decide to move to Melbourne or Sydney, which is a big reason why prices are strongest in these regions. So, we always want to try and understand what is set to occur population wise in any area we are considering to invest in.

Government Stimulus

Since the beginning of the pandemic, the Australian Government have committed nearly $300B towards stimulating the economy and keeping it afloat in response to Covid 19. The FHB market (state and federal) got a huge boost with large FHB grants and support schemes to help FHB’s get in the market and start owning over renting. This saw huge spikes in buyer activities across the industry, and placed pressure never seen before on builders and land developers. As supply chains were heavily impacted, we seen a huge shortage of materials and trades people to fulfil jobs within the system. This led to large price increases in the home building space and put incredible pressure on building companies to honour their commitments.

As this stabilises, I expect that we can see prices plateau a little bit. Until migration fires up (discussed previously), business sentiment improves, and we adjust to the new norm of regular rates and cost of living. Then look out, as all leads towards continuing strength in our most important contributor to the economy (Property).

The good outcome from this was the increase in home ownership for young people. But we need to keep in mind that this still needs support. There are talks of government shared equity schemes coming soon, and other ideas that are being brought to conversations with industry leaders. Our government is very Pro-Property, and have always supported it due to its importance in the way that we live. In Victoria, the property industry contributes in some way or form towards 59% of our overall GDP.

The 25th of October will be an important date for our industry as the Federal Treasurer delivers his budget for 2022-23. I am confident we will see some exciting new incentives for property owners and that sentiment will improve.


Interest Rates

The next thing worth looking at is interest rates and where they are positioned. This has been at all time lows for over 10 years and were always going to come back at some stage. We have been talking about it since forever (it feels like) and it’s now here. We can see what the RBA are doing, with 2.25% worth of increases in just 5 months, they are rapidly working to get this back to a normal reserve rate. Which will likely sit at somewhere between 3-5% I would say (but who really knows).


Now, whilst this scares most people (especially the ones that have stretched themselves) it generally means very good things are happening within our economy. It means that GDP is back on track to where we want it to be, and unemployment levels are strong. Yes, these changes will affect house values short time to a degree, but long term I see this as being a normalisation of the economy which will likely lead to strong growth in wages and overall business wealth (meaning more jobs). This will also bring down inflation and the cost of living which will likely free up further disposable funds for family once things have levelled out. Other things we are seeing is the dramatic increase in wealth of Australians. With the residential property value recently hitting $10T! This means that Australians have equity, and if they are smart, they’ll use it to leverage further. We have also seen rent prices go through the roof, whilst vacancy rates have gone through the floor. These are good things for investors who own assets as the landscape changes.

The real lesson here is to avoid going out and spending more than you can afford. Unfortunately, too many people got caught up in the emotional wave of the market over the last 2 years and spent too much. They didn’t think of the changes that could arrive, and now need new strategies to overcome these challenges. We also love to spend money that isn’t ours on luxury items in Australia. If credit cards can be used more in ways that can benefit families, instead of hurting them – then we are on to a good thing.



In finish, my response to these questions is always this. Own property! And own as much of it as you can. Don’t wait, if you can act, then act. Don’t be zealous – be calculated. But opportunities will always exist in our space. If one state or suburb is struggling, then it doesn’t mean others are. When we understand the economy as best we can, we position ourselves to benefit over those who don’t. This is why I believe our kids need to understand this information and how to use it from a young age. We don’t need to know how to add and subtract anymore, we have phones that do that for us. What we do need to know, is how to build financial stability and skillsets that matter. And most importantly, we need to know how to build happy lives filled with love and connection.  

We know what the difference is long term for those who own and invest over renting (not always by choice), so we need to keep acting upon it. Too many people are retiring below the poverty line in Australia (about 34%), and it’s all come down to their lack of assets (Super, Property or Shares). So, lets keep acquiring, building our wealth so that our future generations can learn and benefit from our hard work and care for ourselves.

As always, “be brave, go above and beyond and back yourself’

Matt Ellul

Director at BuyFair Property Group