Despite a short and sharp market correction, Australian home values have returned to growth much earlier than expected. Here’s what John McGrath thinks will happen next.
In spite of constantly increasing interest rates, Australian home values returned to growth much earlier than expected during FY23 due to a short and sharp market correction.

The East Coast market, led by Sydney, is experiencing a shortage of stock for sale that is providing a driving force behind this new market cycle.

Here’s a look back at FY23 and what’s ahead for FY24.

A pandemic market cycle unlike any other

CoreLogic now fully quantifies the impact of the Covid-19 market cycle on home values across the East Coast over 2020-2022.

Due to the newfound freedom to work from home, a large number of people from the southern states moved to Queensland to live a new lifestyle, making Queensland the biggest beneficiary of this extraordinary period in Australian real estate. With a 41.8% increase in values between the beginning of the pandemic and the city’s peak, Brisbane’s home values grew the most among East Coast capitals. Regional Queensland values climbed 42.6%.

At 38.3%, Canberra and surrounds recorded the second highest growth rate, followed by Hobart at 37.6%.

With 51% growth, regional Tasmania had the highest growth on the East Coast.

Other markets saw home values rise 24.5% in Sydney and 47.6% in regional NSW, and 10.7% in Melbourne and 34.4% in regional Victoria.

First interest rate hike since 2010: its impact

As interest rates rose from May 2022, the pandemic boom ended and a rapid correction ensued. Even though interest rates rose at the fastest rate on record, Australian real estate only fell by 10%, or so, as we usually see in a correction.

Home values changed across the East Coast’s capital cities and regions in FY23.

Median house price changes in FY23

•Sydney -5.7%

•Regional NSW -10.2%

•Melbourne -6.7%

•Regional Victoria-8.9%

•Brisbane -9.9%

•Regional Queensland-5.2%

•Canberra -10%

•Hobart -12.7%

•Regional Tasmania-7%

Source: CoreLogic Hedonic Home Value Index covering the 12 months to June 30, 2023

Major market trends

Capital city markets returned to growth sooner than expected in 2023 as a result of a shortage of homes for sale and strong buyer demand.

Many returning migrants are buying instead of renting because the rental market is so tight and weekly rents have skyrocketed.

A very strong employment situation also contributes to the strength of the market.

There was a decline in dwelling approvals in FY23 as a result of high construction costs and ongoing labour shortages. With fewer people building their dream homes, more competition in the established houses market resulted in higher prices.

Similarly, apartment approvals have fallen more than 50 percent below their decade-average over the past few years.

What’s ahead in FY24

Based on CoreLogic price data, the market appears to be rebounding in Sydney, Melbourne, and Brisbane now.

Due to strong interstate migration, the regions are also turning after a minor correction.

Some buyers are now looking beyond the more expensive big coastal towns to nearby tree-change areas for better values, as discussed in the McGrath Report 2023.

According to CoreLogic data, Queensland is leading the regional market bounce back, with house values up 1.7% and apartment values up 2.2% since the start of 2023.

A key factor driving growth in Australian property in FY24 will be migration. International students are returning, and we are seeing more skilled migrants that will fill a very large labour shortage.

Despite their love for Sydney and Melbourne, migrants are increasingly attracted to Queensland.

Keep in mind that your agent’s experience navigating changing market conditions will be crucial to getting the best sale price in FY24.

Since people are still leaving cities for sea-change and tree-change areas, regional sellers must bear in mind that the buyer pool for their homes has now expanded well beyond their own neighbourhoods.

Your home will appeal to a broader audience if you choose a local agent who has marketing reach and branding power back to the cities through their office networks and buyer databases.

A pivotal year for home owners’ finances, with the RBA hoping to cut the official cash rate in 2024. Four big banks suggest differing interest rate expectations; 2024 represents a pivotal year for home owners’ finances.

Having witnessed rising inflation and cost of living pressures in 2023, will 2024 bring some relief to mortgage holders?

If you have a variable interest rate, or if you have hit the mortgage cliff, you felt the pinch during 2023 with five rate rises.

Hopefully, 2024 will bring pleasant surprises, a reduction in interest rates towards the back end of the year, and inflation can be kept under control.

In 2024, will property prices crash?

The latest ANZ housing report predicts a modest rise of 5 percent in capital city property prices in late 2024. 

However, you should take this advice with a grain of salt since the Reserve Bank of Australia (RBA) predicts a national house price decline of 11% by 2023.

In many markets across the country, prices actually increased during the pandemic, contrary to the Commonwealth Bank’s predictions.

There is no crystal ball, but we do know what to look for to predict a price crash and how to protect our investment properties.

There would need to be a storm of the following for property prices to crash:

• Rates are rising, along with
• Unemployment is rising, along with
• Living costs are rising, along with
• There has been a downturn in the economy, along with
• There has been a drop in demand for housing.

The unemployment rate is one factor keeping our property market strong.

The unemployment rate is near its lowest level since the mid-1970s, at 3.7%.

There is actually a shortage of workers in many industries at the moment. Unemployment levels that are safe are around 4.5-5 percent, and we would start to be concerned if they exceeded 6 percent.

An economic crash would occur if unemployment exceeds 6 percent or even approaches 7 percent.

The demand for housing is so high right now that builders are unable to meet it due to rising costs and a lack of available land in popular areas.

Is there going to be a rate cut in 2024?

According to the big four banks, interest rates are likely to remain stable for most of 2024 before a potential rate cut between August and December.

By May 2025, the Commonwealth Bank predicts rates will fall to 2.85 percent.

We may have to wait until December 2025 before we see rates drop to 2.85 percent, according to Westpac.

There is a downward trend in risky lending

According to NAB, we will see a rate cut sooner, in August 2024, but the rate will remain about 3% by March 2025.

Rates will remain higher, at 3.6% by June 2025, according to ANZ, which predicts the next rate cut will come next Christmas.

Prices are not being held back by rates

We are keeping a close eye on the RBA, the economy, and how it is affecting our property market.

For the first half of 2024, interest rates are expected to stabilize the economy, but they may still rise if inflation continues to rise.

In 2024, many mortgage holders will have moved from low fixed rates to high variable rates, which will have a greater impact on the wider economy.

The next rate cut is likely to come in September or October next year.

The property market has shown resilience and interest rate increases haven’t discouraged first home buyers or investors as much as they have impacted their serviceability and made them rethink their budgets.

As inflation is controlled, we will see even more investors entering the market as they increase their confidence in their investment decisions, which should lead to home price increases.

Five years from now, what will it cost on average to buy a home in your suburb? Some eye-watering median prices have been reported for the Garden City, including several areas that will surpass $1 million.

The median house price in four Toowoomba suburbs could be more than $1m within the next five years, according to new data.

By 2028, the local property sector may look different, according to REA Group’s PropTrack.

Affordability of housing remains an issue in Australia’s real estate market.

In just five years, the median house price in wealthy suburbs such as East Toowoomba ($1,388m), Highfields ($1.11m), Middle Ridge ($1,141m) and Kleinton ($1,003m) could exceed seven figures.

Westbrook ($952,000) and Mount Lofty ($956,000) are also potential competitors.

Using PropTrack data, North Toowoomba may have the lowest median price by 2028, valued at $513,000.

Toowoomba’s growth has been unusually strong since Covid-19 began, according to PropTrack senior economist Angus Moore.

The Toowoomba region has seen home prices rise by just over 52 percent over the past five years, compared to 58 percent for regional Queensland.

Even though it has grown slower than some other regional Queensland areas, all of them have seen strong growth.

A lot of the growth in southeast Queensland can be attributed to the pandemic.

Moore says that Toowoomba has continued to grow despite rising interest rates over the past year, making it stand out from other areas.

Demand remains strong, he said, boosting prices.

Prices in Toowoomba are up a bit over 8 percent in the past year, which is much stronger than what we’ve seen in the rest of the country, where prices have fallen as interest rates have risen.”

Moore believes that the 2028 model could materialize, but some heat would gradually leave the market.

According to him, the rapid pace of growth in the past five years – and what it would mean for median prices if it were to occur again – underscores how unusually strong the past five years have been.

Since the pandemic, prices have increased by 50 percent in Toowoomba and throughout regional Queensland.

There was a 23 percent increase in prices nationwide in 2021 alone.

There has been no faster price growth since 1880.

This kind of growth is unlikely to occur again in the next five years.

Despite rising interest rates, a major bank has raised its property price forecasts for 2023 and 2024 due to a “significant supply-demand imbalance”.

NAB has revised up its near-term forecast for the capital cities after stronger than expected conditions over the past three months, now expecting prices to rise 8%, up from 4.7%.

For a total 13% growth over two years, prices are expected to rise another 5% in 2024 – unchanged from its latest forecast.

In spite of rising rates and reduced borrowing power, NAB chief economist Alan Oster said property prices remain supported by a significant supply-demand imbalance.

We expect prices to rise by around 5% in 2024 as population growth, rent growth and the labour market remain supportive, offset by the ongoing flow-through of higher interest rates.” Mr Oster said.

See NAB’s price forecasts for each capital city

At its November meeting, the Reserve Bank is expected to increase the cash rate to 4.35%, the highest in 12 years, due to higher inflation expectations.

On rates, Mr Oster expects the RBA to raise the cash rate to 4.35% at its November meeting before keeping it on hold until the second half of 2024.

We believe the RBA can ease policy back towards neutral by the end of 2024 with growth below trend and unemployment rising to around 5%.”

The unemployment rate in Australia is currently 3.6%.

Those who lead and those who lag

Over this year and next, NAB expects strong price growth across the combined capital cities, but the momentum will vary by state.

NAB expects Perth’s momentum to slow from 12% growth in 2023 to around 1% in 2024, following some of the strongest price gains this year.

In contrast, Brisbane prices are expected to surge nearly 19% over the next two years, up more than 12% this year and 6.5% in 2024.

Prices in Adelaide are expected to rise 8.6% in 2023 and 6.2% in 2024, nearly 15% over the next two years.

Forecasts for dwelling prices from NAB

In Perth, Brisbane, and Adelaide, PropTrack’s Home Price Index shows prices hit fresh peaks in September due to a lack of choice for buyers.

According to Ms Creagh, Adelaide and Perth have continued to be the strongest capital city markets over the past year, with prices rising 8.31% and 9.24% respectively.

Brisbane’s home prices have already recovered from 2022’s price falls, jumping 0.39% in September to reach a new peak.”

Despite rising 0.09% in September, Hobart remains the weakest performing market, with prices down 6.6% from March 2022 peak.

However, this follows several years of outperformance and strong growth during the pandemic. Hobart’s home prices are still up 38.4% since March 2020.”

NAB forecasts that Hobart prices will remain flat over 2024 after dropping 3.3% this year.

In 2024, Sydney’s strong momentum is expected to ease to 5% from 11.6% in 2023.

There is only one capital city expected to see prices increase next year, and that is Melbourne.

In a recent report, KMPG forecasts that house prices will rise 15% by mid-2025, while apartment prices will jump more than 9%.

• The Palaszczuk Government is bringing train manufacturing back to Queensland with the $9.5 billion Queensland Train Manufacturing Program (QTMP).
• Downer’s joint venture partner Hyundai Rotem has also announced the establishment of a $30 million facility in Maryborough to make sub-components for the trains.
• Major construction has commenced on contractor Downer’s new manufacturing facility at Torbanlea, near Maryborough which will build 65 six-car passenger trains for Queenslanders.

The Palaszczuk Government’s plan to bring train manufacturing back to Queensland is being boosted by a $30 million investment by Downer partner Hyundai Rotem.

The Hyundai Rotem Corporation will establish a stand-alone local presence on the Fraser Coast with the purchase of an industrial site and plans to establish a factory to produce sub-components for train car bodies.

Roll forming involves the continuous bending of a long strip of sheet metal (typically coiled steel) to make sub-components for train car bodies.

This kind of component has been made overseas for decades but will now be made locally as part of the Palaszczuk Government’s commitment to bringing train manufacturing back to Maryborough, creating an additional 20 jobs.

The Hyundai Rotem facility is in addition to the QTMP site being built at Torbanlea and Downer’s facility at Maryborough.

Major works are underway at the Torbanlea facility to transform from a former pineapple farm into Australia’s newest state-of-the-art train manufacturing facility, which will manufacture 65 six-car passenger trains to run on the SEQ train network.

The Queensland Train Manufacturing Program will support 800 construction and manufacturing jobs.

Downer was awarded the Design Build Maintain Contract (DBM) for the QTMP earlier this year and has partnered with the Hyundai Rotem Corporation (HRC) for the manufacturing of the 65 new trains.

Once the first QTMP train has been built in 2026, it will begin testing before entering passenger services in 2027. All 65 trains are expected to be in service in time for the Brisbane 2032 Olympic and Paralympic Games while helping to run additional services that will be delivered by the Cross River Rail and Logan and Gold Coast Faster Rail projects.

A co-design process is ongoing with the disability sector to inform the design of the new QTMP trains.

This will shape the design of the 65 new passenger trains to ensure they are compliant, functional, and accessible for all passengers.

Early works to upgrade local intersections within Torbanlea started in August 2022 ahead of the start of construction on the train manufacturing facility.

Quotes attributable to Minister for Transport and Main Roads Mark Bailey:

“We welcome Hyundai Rotem’s additional investment in this steel roll forming facility.

Queensland Train Program Boosts Maryborough Investment

Minister for Transport and Main Roads and Minister for Digital Services The Honourable Mark Bailey

• The Palaszczuk Government is bringing train manufacturing back to Queensland with the $9.5 billion Queensland Train Manufacturing Program (QTMP).
• Downer’s joint venture partner Hyundai Rotem has also announced the establishment of a $30 million facility in Maryborough to make sub-components for the trains.
• Major construction has commenced on contractor Downer’s new manufacturing facility at Torbanlea, near Maryborough which will build 65 six-car passenger trains for Queenslanders.

The Palaszczuk Government’s plan to bring train manufacturing back to Queensland is being boosted by a $30 million investment by Downer partner Hyundai Rotem.

The Hyundai Rotem Corporation will establish a stand-alone local presence on the Fraser Coast with the purchase of an industrial site and plans to establish a factory to produce sub-components for train car bodies.

Roll forming involves the continuous bending of a long strip of sheet metal (typically coiled steel) to make sub-components for train car bodies.

This kind of component has been made overseas for decades but will now be made locally as part of the Palaszczuk Government’s commitment to bringing train manufacturing back to Maryborough, creating an additional 20 jobs.

The Hyundai Rotem facility is in addition to the QTMP site being built at Torbanlea and Downer’s facility at Maryborough.

Major works are underway at the Torbanlea facility to transform from a former pineapple farm into Australia’s newest state-of-the-art train manufacturing facility, which will manufacture 65 six-car passenger trains to run on the SEQ train network.

The Queensland Train Manufacturing Program will support 800 construction and manufacturing jobs.

Downer was awarded the Design Build Maintain Contract (DBM) for the QTMP earlier this year and has partnered with the Hyundai Rotem Corporation (HRC) for the manufacturing of the 65 new trains.

Once the first QTMP train has been built in 2026, it will begin testing before entering passenger services in 2027. All 65 trains are expected to be in service in time for the Brisbane 2032 Olympic and Paralympic Games while helping to run additional services that will be delivered by the Cross River Rail and Logan and Gold Coast Faster Rail projects.

A co-design process is ongoing with the disability sector to inform the design of the new QTMP trains.

This will shape the design of the 65 new passenger trains to ensure they are compliant, functional, and accessible for all passengers.

Early works to upgrade local intersections within Torbanlea started in August 2022 ahead of the start of construction on the train manufacturing facility.

Quotes attributable to Minister for Transport and Main Roads Mark Bailey:

“We welcome Hyundai Rotem’s additional investment in this steel roll forming facility.

“Our commitment to bring train manufacturing to Queensland is attracting additional investment.

“This is an exciting time for QTMP, which will create hundreds of long-term Queensland jobs and reinvigorate train manufacturing in Queensland.

“This project will train a new generation of highly-skilled Queensland workers in train manufacturing, which will have long-term benefits to our economy, transport infrastructure and manufacturing industry.

“It is truly historic to be here today at the start of what will be a rail manufacturing revolution for Maryborough, which will remain the birthplace of Queensland trains for years to come.”

Quotes attributable to Assistant Minister for Train Manufacturing and Regional Roads and Member for Maryborough Bruce Saunders:

“This is a landmark day for Maryborough and the broader Fraser Coast region.

“It’s truly special to be here today at the start of major construction on a project I fought hard to help deliver.

“In the coming months, we will start to see a brand-new manufacturing facility rise from the ground up.

“The first trains will complete manufacturing and commence testing in late 2026, with all 65 trains expected to be in service by 2032.

Queensland Train Program Boosts Maryborough Investment

Minister for Transport and Main Roads and Minister for Digital Services The Honourable Mark Bailey

• The Palaszczuk Government is bringing train manufacturing back to Queensland with the $9.5 billion Queensland Train Manufacturing Program (QTMP).
• Downer’s joint venture partner Hyundai Rotem has also announced the establishment of a $30 million facility in Maryborough to make sub-components for the trains.
• Major construction has commenced on contractor Downer’s new manufacturing facility at Torbanlea, near Maryborough which will build 65 six-car passenger trains for Queenslanders.

The Palaszczuk Government’s plan to bring train manufacturing back to Queensland is being boosted by a $30 million investment by Downer partner Hyundai Rotem.

The Hyundai Rotem Corporation will establish a stand-alone local presence on the Fraser Coast with the purchase of an industrial site and plans to establish a factory to produce sub-components for train car bodies.

Roll forming involves the continuous bending of a long strip of sheet metal (typically coiled steel) to make sub-components for train car bodies.

This kind of component has been made overseas for decades but will now be made locally as part of the Palaszczuk Government’s commitment to bringing train manufacturing back to Maryborough, creating an additional 20 jobs.

The Hyundai Rotem facility is in addition to the QTMP site being built at Torbanlea and Downer’s facility at Maryborough.

Major works are underway at the Torbanlea facility to transform from a former pineapple farm into Australia’s newest state-of-the-art train manufacturing facility, which will manufacture 65 six-car passenger trains to run on the SEQ train network.

The Queensland Train Manufacturing Program will support 800 construction and manufacturing jobs.

Downer was awarded the Design Build Maintain Contract (DBM) for the QTMP earlier this year and has partnered with the Hyundai Rotem Corporation (HRC) for the manufacturing of the 65 new trains.

Once the first QTMP train has been built in 2026, it will begin testing before entering passenger services in 2027. All 65 trains are expected to be in service in time for the Brisbane 2032 Olympic and Paralympic Games while helping to run additional services that will be delivered by the Cross River Rail and Logan and Gold Coast Faster Rail projects.

A co-design process is ongoing with the disability sector to inform the design of the new QTMP trains.

This will shape the design of the 65 new passenger trains to ensure they are compliant, functional, and accessible for all passengers.

Early works to upgrade local intersections within Torbanlea started in August 2022 ahead of the start of construction on the train manufacturing facility.

Quotes attributable to Minister for Transport and Main Roads Mark Bailey:

“We welcome Hyundai Rotem’s additional investment in this steel roll forming facility.

“Our commitment to bring train manufacturing to Queensland is attracting additional investment.

“This is an exciting time for QTMP, which will create hundreds of long-term Queensland jobs and reinvigorate train manufacturing in Queensland.

“This project will train a new generation of highly-skilled Queensland workers in train manufacturing, which will have long-term benefits to our economy, transport infrastructure and manufacturing industry.

“It is truly historic to be here today at the start of what will be a rail manufacturing revolution for Maryborough, which will remain the birthplace of Queensland trains for years to come.”

Quotes attributable to Assistant Minister for Train Manufacturing and Regional Roads and Member for Maryborough Bruce Saunders:

“This is a landmark day for Maryborough and the broader Fraser Coast region.

“It’s truly special to be here today at the start of major construction on a project I fought hard to help deliver.

“In the coming months, we will start to see a brand-new manufacturing facility rise from the ground up.

“The first trains will complete manufacturing and commence testing in late 2026, with all 65 trains expected to be in service by 2032.

“These 65 new trains will support South East Queensland’s population boom, as well as Cross River Rail and the Brisbane 2032 Olympic and Paralympic Games.”

Quotes attributable to Downer Head of Rail and Transit Systems Steve Kakavas:

“The construction works now underway will involve installing site offices, undertaking geotechnical testing, connecting services including water and electricity connections, clearing vegetation and undertaking bulk earthworks.”

Quotes attributable to Hyundai Rotem CEO Yong-Bae Lee:

“Hyundai Rotem’s Maryborough factory will be operational in 2025 and will provide the roll forming to be used for rail car bodies at the Torbanlea train manufacturing facility.

“Queensland does not currently have roll forming capability, and such components have historically been made overseas. We believe this investment strengthens Queensland’s rail manufacturing capabilities while creating new jobs in the region.”

Fast facts (QTMP Torbanlea facility):

• The footprint of the train manufacturing facility is approximately 30,000m2, almost three times the size of Suncorp Stadium.
• Approximately 2,400 tonnes of structural steel will be used in the construction of the manufacturing facility.
• More than 20,000 cubic metres of concrete will be used to construct slabs for the manufacturing facility.
• Around 2.3km of new road will be constructed from the facility gatehouse to the manufacturing facility.

First home buyers in Queensland will be able to access $30,000 under a new scheme that has doubled the first home owner grant.

The Queensland government today announced the grant would apply for new builds under $750,000 until mid-2025.

Premier Annastacia Palaszczuk said it was part of a raft of measures intended to ease cost of living pressures.

“I want to see home ownership rates continue to rise,” she said.

“I hope this puts the dream of owning a first home within reach for more Queenslanders.”

Property prices across the nation have reached an all-time high and interest rates are placing extreme pressure on households.

The new grant will come into effect on Monday and can be used for a granny flat or regular home.

The extra cash is coming from increased taxes for the mining sector.

“We can only do this because we’re making sure coal companies pay their fair share,” Palaszczuk said.

So, who can claim the Queensland First Home Owner Grant?

To claim the $30,000 grant, you must be 18 years or older, as should any co-applicant.

You both must be Australian citizens or permanent residents and you cannot access this grant if you’ve already received a First Home Owner Grant in the past or owned residential property.

The grant cannot be used for the purchase of investment properties, and you must live in the home you’re buying or building for at least six months.

You must be buying or building a new home valued up to the threshold of $750,000. The home can be a house, a unit, a duplex or a townhouse.

The grant also applies to a granny flat built on a relative’s land.

Where can you build a granny flat?

The granny flat could be built on land owned by your parent, grandparent, child, stepchild, sibling or the spouse of any of these people.

The landowner must seek approval from the local council and must ensure the dwelling complies with building code requirements.

But who owns the granny flat?

The granny flat exists as a secondary dwelling on the land owned by the relative, so it doesn’t exist as a separate title.

But the First Home Owner Grant recipient will have a right to occupy the granny flat as their home on the land owned by the relative.

This will be assessed by the Queensland Revenue Office and would typically be demonstrated by a statutory declaration and a written agreement between the applicant and their relative.

Matthew Raven, chair of the Queensland Law Society’s property and development committee, said unless the granny flat was a moveable dwelling it would belong to the owner of the land.

“Whatever happens to the land the granny flat goes with it,” he said.

“So if it is sold by the land owner the buyer would take the granny flat, if they die then it would go in accordance with their will, and if a mortgagee stepped in to exercise power of sale then they would be able to sell the land including the granny flat to someone else.”

Are construction costs still climbing?

Yes. But during the September quarter, CoreLogic observed a slowdown in its construction cost index, which returned a quarterly growth rate of 0.5 per cent nationally.

That was the smallest lift since the three months to June 2019.

Of all the states, Queensland saw the highest quarterly increase in construction costs at 0.8 per cent.

On an annual basis, CoreLogic observed costs increased by 4.8 per cent in Queensland.

CoreLogic’s head of research, Eliza Owen, said the slowdown in new dwelling approvals could relax the demand on materials and labour, further stabilising construction costs.

Master Builders Queensland welcomed the First Home Owner Grant boost and said there was an emerging capacity to meet demand for residential construction in Queensland as approvals slowed.

But the Real Estate Institute of Queensland (REIQ) said it was the wrong lever for the government to pull.

It warned the grant could bring forward high demand and again put pressure on the cost of building supplies and the ability to access tradespeople.

Where will these homes be built?

Up to 12,000 eligible applicants can claim the First Home Owner Grant to purchase or build a new home.

However, the initiative comes during a time when Queensland has limited available land.

The REIQ says the south-east corner needs more than 40,000 additional homes built each year, while the Queensland government itself aims to build 900,000 new homes in the south-east corner by 2046.

Amendments to the Planning Act — giving the Queensland planning minister more power to acquire land for specific purposes and the creation of a new zone for developments — are being considered by the State Development and Regional Industries committee.

The government said the bill would open under-utilised land, unlocking supply.

Will incentives inflate house prices?

For future home buyers like Ms Colgan, options include waiting and saving or trying to buy a home with a deposit as small as 5 per cent, which then incurs lenders mortgage insurance (LMI) that adds thousands to the mortgage.

Borrowers can also apply for one of 35,000 First Home Guarantee places and have the federal government guarantee the home loan, pending certain conditions.

Economist Saul Eslake said incentives like the First Home Guarantee and the First Home Buyer Grant only hurt people like Ms Colgan in the long run.

“We have almost 60 years of evidence that these schemes don’t do anything to increase home ownership rates, especially among younger Australians, but they do increase house prices,” Mr Eslake said.

“Anything that allows people to pay more for housing than they would have been able to without these schemes results in more expensive housing — not in more people 

owning the housing, and this is just the latest example.”

Queensland Treasurer Cameron Dick said he did not expect the changes to the First Home Owner Grant to inflate home values as it only applied to new homes and builds.

Investing in your first home is a significant milestone, and exploring the various options available can be both exciting and daunting. One increasingly popular choice among first-time homebuyers is dual occupancy properties. These unique homes offer distinct advantages that make them an attractive investment opportunity. Let’s delve into why dual occupancy could be a smart move for those entering the property market for the first time.

Maximizing Income Potential

Dual occupancy homes, often featuring separate living spaces or units under one roof, provide an opportunity to generate income. For instance, you can live in one part of the property while renting out the other. This setup allows you to offset mortgage costs or supplement your income, which can be immensely beneficial, especially for first-time homeowners navigating initial expenses.

Flexibility in Living Arrangements

The versatility of a dual occupancy property is unparalleled. Whether it’s accommodating extended family, having space for a home office, or using the additional unit for rental income, this setup offers adaptability to changing needs over time. As your circumstances evolve, so can the use of these spaces, making it a versatile long-term investment.

Diverse Market Appeal

Properties with dual occupancy potential often attract a broader range of potential buyers and renters. This increased appeal can lead to quicker resale or rental opportunities, offering flexibility and liquidity in the property market. Moreover, having multiple rental streams can provide stability even if one unit is vacant, reducing the impact of potential income fluctuations.

Stronger Investment Potential

The dual income potential of these properties can result in more favorable financial outcomes compared to traditional single-unit properties. While initial costs might be higher, the added income from renting out a portion of the property can significantly impact your financial situation, potentially leading to faster equity buildup and increased overall wealth.

Future-Proofing Through Design

Modern dual occupancy properties often incorporate contemporary designs that cater to evolving lifestyle needs. These homes frequently prioritize energy efficiency, low maintenance, and innovative layouts, appealing to a wide range of prospective tenants or buyers. This forward-thinking design can enhance the property’s value over time and contribute to its attractiveness in the market.

Considerations and Caution

While the advantages of dual occupancy properties are compelling, it’s crucial to conduct thorough research and due diligence. Consider factors like local zoning laws, regulations, potential maintenance costs, and market demand. Engaging with a real estate professional or financial advisor can provide invaluable guidance in navigating the complexities of this investment.

Conclusion

Investing in a dual occupancy property as a first home can be a strategic move, offering not only a place to live but also a source of income and potential growth. The flexibility, income potential, and broader market appeal make it an enticing option for those entering the real estate market. However, as with any investment, careful consideration and planning are vital to ensure it aligns with your goals and circumstances.

By exploring the unique advantages of dual occupancy properties, first-time homebuyers can embark on a path that not only provides a comfortable living space but also sets the stage for long-term financial security and growth.

NDIS is an Australian government-run program that was introduced in 2016 with the aim of improving the well-being of Australians with disabilities. According to the government, around 4.4 million Australians live with disabilities. 

Specialist Disability Accommodation (SDA) is a key component of the NDIS. Individuals with high support needs or functional impairments are accommodated in SDA housing. 

Due to the severe shortage of suitable housing, there is a significant demand for more suitable housing. Due to this, the government has offered longer tenancies and higher rents than average to attract private investors. 

The current high returns could make NDIS properties a great investment option for property investors despite the several hoops involved. 

Before you commit to an NDIS property investment, there are a few things you need to know. Here are the top five things you should consider before making a decision.

1. Specialist Disability Accommodation Investments Require The Same Due Diligence As Other Real Estate Investments

Despite NDIS properties being in high demand and offering great returns on paper, any investment comes with risk, and you should always conduct due diligence before investing. 

Beyond the traditional due diligence steps, such as getting pre-approval for a home loan, conducting inspections, and making sure you have sufficient cash flow to sustain your lifestyle and investment, it is important that you understand the special requirements that must be met in order to be certified by the NDIS. 

Also, make sure you are buying in an area where this type of accommodation is in high demand. It could be an area with a low supply of NDIS-compliant properties or an area with a high concentration of NDIS participants. 

Additionally, you should consider the challenges tenants in that area face in finding suitable accommodations. You can ensure that your property meets the individual needs of each tenant by taking the time to assess their specific needs.

As an example, someone who has a physical disability may need wider doorways and hallways to accommodate a wheelchair, while someone with a cognitive impairment may benefit from clear signage and well-lit rooms.

Since the industry is regulated, reviewed, and funded by the government, it needs to be monitored constantly for any changes that could impact the outcome.

As a result, you’ll have to invest more upfront than you would when building or renovating a standard investment property. In light of your circumstances and investment goals, you’ll have to take this into consideration when determining if this is a financially feasible investment.

2. SDA Properties Can Be Purchased in Several Ways

Investing in SDA properties involves modifying traditional properties to meet the necessary standards. Probably the most complex option out of the three, but there are contractors and architects that offer specialized services for modifying homes to meet SDA requirements.

SDA advisory organizations can also give you guidance on the way forward to ensure that you are taking the right steps. This may be a good option if you own an existing property in an area where NDIS properties are needed and have the funds to renovate or modify it. 

A second option is to purchase NDIS-approved SDA housing that is already built and equipped. For existing properties, you can use an SDA provider and a specialist real estate agent, but the supply is relatively low. Consequently, you may have difficulty finding the right property. 

The third option is to purchase a house and land package specifically designed for SDAs. In addition to being the easiest way to buy an SDA property, there is a need for newly built properties due to the low supply of NDIS housing.

3. SDA Standards Must Be Met By Each NDIS Property Investment

The NDIS SDA property programme provides safe and attractive housing options for people with disabilities. By ensuring that the accommodation is fit for purpose and meets residents’ specific needs, the SDA standards aim to improve resident liveability.

For example, SDA standards require that these properties be accessible and have enough space to accommodate wheelchair users, as well as features such as level entryways, wide doorways, and accessible power outlets. All kitchen appliances must also be accessible regardless of whether the resident is seated or standing. 

Furthermore, SDA standards require properties to be more robust than conventional properties, which reduces the likelihood of reactive maintenance. As a result, NDIS participants can be confident that their homes will not require significant repairs or replacements anytime soon. 

Last but not least, each dwelling must meet certification standards to enrol in the NDIS. Most of the requirements and obligations for SDA can be found in the NDIS (Specialist Disability Accommodation) Rules 2021 (SDA Rules).

4. National Disability Insurance Scheme participants receive funding, not property

In order to qualify for SDA funding, compliance with the NDIS is an important requirement, but it is not the only one. A NDIS participant who is willing to rent your property is required to receive SDA payments from NDIS service providers. No matter how compliant your property is, you won’t be able to receive any funding without a tenant.

As a result, the SDA funding helps cover the costs of care and support for people with disabilities, not to subsidise landlords who build specialized housing for disabled people. 

Essentially, securing a tenant for your SDA-compliant property is the same as securing a tenant for an ordinary investment property.

5. There are tax implications when you invest in the NDIS

You will be required to pay income tax on the rental income you generate from your NDIS tenants, just as you would on any other investment property. Moreover, you will be able to deduct depreciation, rental expenses, and mortgage interest as part of your investment property tax deductions. 

Compared to a traditional investment property, you may be able to claim higher depreciation deductions as building costs and plant and equipment requirements are higher. Make sure you get a tax depreciation schedule from a qualified quantity surveyor to maximize your tax deductions.

Key Takeaways

People with disabilities can receive support through the NDIS, a government initiative. In order to accomplish this, it provides funding for housing and care services. As a result, the market for NDIS-compliant properties has grown, which are built with people with disabilities in mind.

An excellent way to enter the property market for new investors is through SDA properties. By planning and researching carefully, they can lay a solid foundation for successful investing. As with any investment, you’ll need to keep an eye on your tax consequences. 

We can provide you with tax advice on how to structure your property ownership to minimise your tax liabilities. 

As the real estate market celebrates the first month of spring selling season, house prices continue to rise in the Hunter. 

During the past year, they rose by 2.61% in Newcastle and Lake Macquarie.

There was a 1.36% rise in Hunter Valley prices this quarter and a 2.53% increase compared to 2022.

As a result of the growth, industry experts say the property market has regained confidence. 

In 2022, the nation experienced one of the worst house price slumps in decades. 

In September, home prices in Australia rose 0.8%, marking the eighth consecutive month of growth. 

In regional NSW, home prices increased 0.7% on last year in September, according to the PropTrack Home Price Index. 

In September, Sydney home prices rose 0.48%, to be up 6.86% year-over-year, for the tenth consecutive month. 

In her report, PropTrack’s Eleanor Creagh says the most rapid decline in home prices in recent history has now fully reversed, with national house prices returning to peak. 

In September, the spring selling season got off to a busy start. Across the major capitals, buyer and seller confidence is on the rise, and choice is improving significantly.  

National home prices have recovered all of 2022’s rapid price falls to reach a record high in September despite an increase in the number of properties coming to market.  

Increasing net overseas migration, tight rental markets, and a housing shortage have driven home price growth.  

There has been a sharp increase in the number of properties hitting the market in Sydney and Melbourne, which has given buyers a greater choice, but strong demand has caused prices to rise.  

It is likely that interest rates have reached their peak and population growth is rebounding strongly. Prices are expected to rise as a result of a shortage of new home construction. More markets are likely to reclaim 2022’s fast falls to set new peaks as spring approaches.” 

Tim Lawless, the research director at CoreLogic, shares this sentiment. 

“We may see renewed affordability challenges deflecting more demand towards the middle of the market where entry barriers are lower,” he said. 

It appears that soft housing conditions across regional Australia are driven more by demand, as home sales are estimated to be 6.5% lower than a year ago and 9.2% lower than the previous five-year average. 

In November, Mr Lawless expects the national Home Value Index to reach a new nominal high at the current rate of growth. 

A new report says regional Queensland was the most attractive destination for Australians in 2022.

Key points:

• In 2022, regional Queensland proved to be the most popular place to move
• Those living in regional areas are most likely to relocate to Bundaberg and the Fraser Coast
• Net internal migration was highest on the Sunshine Coast and lowest on the Gold Coast

The Sunshine Coast topped the Regional Movers Index for internal migration last year, followed by the Gold Coast.

Third, fourth, and fifth in terms of net migration inflows were Greater Geelong in Victoria, Fraser Coast in Queensland, and Bundaberg in Queensland.

Additionally, Bundaberg and the Fraser Coast were the most popular areas for people to relocate to, with Bundaberg seeing an increase of 46.4%.

In 2022, the Fraser Coast recorded a 3.8% increase over the same quarter last year.

Kim Houghton, chief economist at the Regional Australia Institute (RAI), says regional Queenslanders are “on the move”.

According to him, Queensland does have quite a large regional population, with about half in regional areas and half in Brisbane, and we can see they’ve moved around quite a bit over the years.

Regional Queensland’s housing affordability and lifestyle continue to drive growth, according to Commonwealth Bank’s executive general manager for agribusiness and regional banking, Paul Fowler.

In terms of shining a light on the region-to-region migration in Fraser Coast and Bundaberg, we have a couple of new players.

In contrast, Bundaberg is seeing a greater share of net internal migration from other regions, as compared to the Fraser Coast, where migration from capitals is balanced.

“Seeing those LGAs prominently featured is really exciting.”

Bundaberg, the Fraser Coast, Toowoomba, and the Sunshine Coast have the largest share of [regional movers].

Mayor says region has a ‘strong, stable community’

Jack Dempsey, mayor of the Bundaberg Regional Council, says it is “great news”.

The reason people come to Bundaberg is because of its lifestyle and liveability.

There are good hospitals and education facilities in our country.

“Our community is strong and stable.”

Wide Bay residents have been working hard to promote the positive aspects of living there, according to Mr Dempsey.

It is a beautiful region, and the citizens are proud of it,” he said.

It’s just a matter of maintaining confidence and positivity.”

Housing market is tight

In spite of the boost in popularity, Wide Bay real estate agents say it has become more difficult to find housing for people relocating to the area.

Real estate agent Wal Pavey said it was “still a very tight market” in Maryborough.

He explained that there isn’t much stock for sale, the same for rental properties, and even commercial leasing and storage are in high demand.

There is a serious shortage of affordable housing in our country.”

There has been a noticeable increase in people moving to Maryborough from Sydney and Melbourne, according to real estate agent Grant Carpenter.

There has definitely been an increase in inquiries, he said.

The place is getting a lot of interest from out of town, and investors are coming in.

According to Mr Houghton, regional Queensland’s housing and services need to keep up with population growth.

There is no doubt that the availability of housing as an absolute will limit people’s ability to move in,” he said.

Housing and jobs will continue to be freed up as people move from region to region, says Mr Houghton.

Whenever someone moves in the area, some spots become available.

We’re not seeing any signs of this [growth] really petering out at the moment, so I think we’ll continue to see mobility in that area.”