Herron Todd White
Herron Todd White
Month in ReviewNews

A message from the CEO

Published 28 March 2024
Author: Sarah Rackemann

Welcome to the March edition of Month in Review

We are now almost a quarter of the way through 2024, which is normally the point each year when the property market establishes its level. This year, our teams report that in most centres, the same drivers that dictated market direction toward the end of 2023 will continue in the near term. There was some speculation that property price growth may slow this year, but that hasn’t come to pass yet. Analysis to the end of February shows almost every capital city has seen values rise in the past three months with Perth, Adelaide and Brisbane recording some extraordinary results. The enduring strength of these markets is well illustrated by our monthly property clock. Brisbane and Perth have been firmly entrenched in the Start of Recover/Rising Market quadrant since October 2023, while Adelaide has moved from what appeared to be a market peak in September back to being a Rising Market now. It’s relatively easy to see why there are higher real estate prices across most centres—there’s simply too little supply to meet current and growing demand.

One of the primary reasons for this has to do with the economics of producing new housing. There are too many pockets across this country where the cost to deliver a new home to market makes little sense if a developer expects a reasonable return on their investment.

A recent Herron Todd White presentation to the Mortgage & Finance Association of Australia showed the cost of building a home has increased dramatically in the past two years. We have reached a point where the disconnect between construction costs, property availability and established house prices is material, driving up the value of homes and acting as a disincentive to building new dwellings.

Unless the sizable gap between cost and value is addressed, there seems no short-term solution to the lack of supply. We need to either see prices increase by 20 per cent, or development costs reduce by 30 per cent if we want to incentivise developers toward creating more housing. And, of course, limited supply also feeds into low rental vacancies and increasing rents for most population centres.

The other factor is that we’re unlikely to witness interest rates go up again anytime soon and if (or rather, when) they do come down, that will stimulate prices further. This month, our residential section provides comprehensive coverage about investment opportunities throughout the country.

For our commercial property readers, it’s time for predictions about Australia’s industrial real estate markets. Our teams give a comprehensive wrap on where they feel major markets will head as 2024 unfolds.

Finally, this month’s Agribusiness section delivers an in-depth analysis of the nation’s horticultural markets and sector performance.

Please enjoy our March 2023 edition of Month In Review.