Before April this year, Australia’s property markets were in a very unusual position. Values in all the capital cities and major regional areas had been growing for two years on the back of super low interest rates and Covid stimulus.

Ordinarily, markets in different capitals, states and territories are at different stages of property cycles. When Perth is set for growth for example, Sydney may be plateauing, or Melbourne falling.

Once the RBA started raising rates, it signalled the party was over.

With back to back aggressive hikes by the central bank, values began to fall and a fair whack of the growth disappeared over the rest of the year.

So now that the Covid boom has been and gone, what next for Australia’s property markets?

Pre-covid conditions return

Before the craziness of early 2020, Aussie markets were in a similar position to where they are now. Sydney and Melbourne were flat as they were still coming off booms between 2013 and 2018. Adelaide and Perth were slowly beginning to show improvement and hint at further potential.

The big mover was Brisbane and a lot of southeast Qld, which was enjoying its first boom period in a couple of decades.

All of these conditions were temporarily interrupted by the pandemic, but now it looks like we’re back to a similar position.

There is plenty to like about Western Australia and Queensland for upside, while Sydney is now serving up some great opportunities to buy at a bargain and reap the rewards later.

Adelaide is in decent shape, but Melbourne has never appealed to b Invested founder Nathan Birch as an investment destination option. 

Perth

Perth and Western Australia in general have been due for some growth for a number of years. Economically, the state runs to the beat of a different drum than the rest of the country, so had a property surge on the back of mining investment in the noughties, before correcting in a big way. It has endured a plateau period and was beginning to emerge with upside when Covid struck.

Perth didn’t have as big a growth spurt as the rest of the capitals during the pandemic, so is now primed to make up some ground as other markets run out of steam. 

Vacancy rates are tight and there will be options to buy under value and get a good return.

Brisbane

Southeast Queensland has plenty to look forward to with a decade leading up to the Brisbane Olympics in 2032. In this time, significant infrastructure investment will supercharge the city’s potential, while areas like the Gold Coast still have a lot of room to grow.

Vacancies are tight in the sunshine state and rents will likely continue to rise throughout 2023.

Sydney

Sydney is Australia’s most solid and lucrative property market. No sooner had values begun to fall with rate rises that people began to notice they weren’t falling that much.

The harbour city suffers from a chronic shortage of property supply for buyers and renters, which puts a floor under values. That will only be reinforced by the influx of foreign migrants, workers and students expected now borders are open again and the government has lifted the migration cap.

There is also talk that the RBA will begin to cut rates again next year. If that were to happen, Sydney would get a confidence boost and likely recover much of any falls that are occurring now. 

There will still be some uncertainty before that happens however and next year will likely see more of the great opportunities that b Invested clients have been able to access in the back half of 2022.

Overall factors

Investors in each of these markets will benefit from a shortage of property supply; less competition from owner-occupiers due to rising rates damaging borrowing power; an increase in migration putting more upwards pressure on prices; and a vacancy rate below 1% that doesn’t look like easing up any time soon.

There are always opportunities and great deals to be found, no matter what the market conditions, but this current period will be especially tantalising for investors in the markets discussed above.