Kingston - Winter 2024 Market Review

With affordability at an all-time low and interest rates impacting both buyers and sellers, market sentiment has taken a further knock this quarter. Though nationally, the property market has continued to grow against the odds. With tightly held supply balancing against a burgeoning population, is it the bank of mum and dad that has kept the current market afloat? And will this trend deepen, given the persistent price growth?

Despite the lift in stock for sale, there was also a significant increase in sales volumes as the market proved much more resilient to the high interest rates persisting for longer than first anticipated.  Much of this can be credited to Kingston itself. This enduringly alluring destination increases in demand as sustained infrastructure investment continues to pour into transport networks, cutting edge community facilities and premier sporting centres, and access to beautiful Port Phillip Bay.

Buyer demand remained strong this quarter, as turnkey properties and premium homes in prime locations outperformed the rest of the market. As remote work consolidated the dynamics altered somewhat as buyers tended to seek out lifestyle homes with indoor outdoor living. Investors increasingly gravitated toward quality over quantity in order to capitalize on sustainable income and long-term growth potential.

Seller sentiment was multi-faceted this quarter, as Trevor Bowen from Ray White Cheltenham said, “Seller inquiry increased but not significantly. Vendors were waiting to sell once they had purchased. Landlords sold a lot of their portfolios based on the doubling of Land Tax in Victoria, compliance costs, and of course the record 13 x interest rate rises. I normally sell only 3 or 4 rentals per year. This year so far I have sold 12 with another 8 on my books”.

Properties requiring considerable work struggled, as the construction sector still faced rising building costs and supply chain interruptions. Interestingly, despite this construction cost dilemma, multi-unit apartment blocks and townhouse developments were on the rise. With affordability at an all-time low, this will present valuable future buy-in options for first home owners, downsizers and investors, a much-needed diversification as the market attempts to better cater to the changing landscape.

Looking Ahead

There’s no doubt this nation’s property market is facing some challenging times ahead. As the level of new dwellings completed state wide hits the lowest point in a decade, construction costs rise by 25% over the past 3 years, and financing costs massively impact affordability, the level of new builds will continue to drop in coming years. Which will most likely cause the overall demand for housing to flow towards established properties and an extremely tight rental market.

As prices rise at an unexpected pace, dropping off slightly in the past few months, and stronger than anticipated inflation endures, interest rates are sitting at a 12 year peak. Just a few months ago it seemed likely that rates would be cut later this year, now this change has been pushed back to an undetermined date in the first half of next year. Borrowing capacity is suffering as the volume of stock increases, and there is no doubt the housing market forecast would be much brighter if rates were to drop when first predicted. Mathew Cox from Buxton Mentone added, “I feel an influx of properties will come from those previously owned by landlords now looking to offload due to the high expenses attached to being a property owner, land taxes, property compliance & higher interest rates have made property investment less palatable than ever”.

Paul Sibley from Buxton Hampton East gave his market forecast, “Supply will increase, and depending on what happens with interest rates we could see renewed caution in the market which will test out demand vs supply and days on market. If interest rates remain steady then we should see some longer term confidence come in and the market should remain balanced, with more buyer and seller expectations meeting and clearance rates remaining steady between now and the end of the year”. Despite it all, with its premier lifestyle offerings and exponential infrastructure growth, combined with increased consumer confidence and strong demand, Kingston remains a sound investment with a very promising outlook.