The Australian housing market continues to show remarkable resilience despite increasing cost-of-living pressures and higher interest rates, according to Herron Todd White.
HTW’s Month in Review for April showed that demand for housing remains high, driven largely by population growth, which starkly contrasts with a dwindling supply due to building approval delays, material shortages, labour scarcities, and financial strains on builders.
The current imbalance between supply and demand is maintaining market stability across most regions.
“Demand for housing is extremely strong, fuelled in large part by population growth,” said Gavin Hulcombe (pictured above), managing director of HTW Brisbane. “This is coming up against limited supply caused by a lag in building approvals, a shortage of materials, scarcity of labor, and even builders being impacted by torrid financial conditions.”
There has been a noticeable shift in buyer preferences, with many seeing greater value in attached housing such as apartments and townhouses, particularly in major population centers.
“As the value gap widens between houses and units, then buyers reach a point where they identify good value in attached housing prices,” Hulcombe said. “This has been happening of late across most major population centers.”
The market for established units, unlike that for new units, is trading well below replacement costs, presenting unique investment opportunities.
Hulcombe highlighted the potential in the current market, especially for well-located units offering desirable living conditions.
“I see opportunities in unique, well-located units, whether CBD, city fringe or even a little further out, which offer an attractive space to live,” he said, suggesting that properties with appealing features such as views or proximity to amenities are likely to be more valuable.
He also advised caution on extensive renovations due to the high costs but recommends cosmetic updates to enhance property value.
While the housing market remains strong, the ongoing challenges in supply and rising construction costs suggest that buying established units could be more economically viable than commissioning new constructions.
“It is worth doing your homework, but it certainly helps your investment if the cost of producing a new unit next door is 30% more than what you are paying for the one that’s already built,” Hulcombe said.
Download and read the Herron Todd White Month in Review for April.
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