July Property Market Update – Don’t Panic Sell

Market Cycle Timing vs. the DSR

Damien and Jeremy open by noting that not much has changed since the previous month, and that a full picture of the impact of recent changes will likely take another couple of months to become clear. Looking at Market Cycle Timing (MCT) figures, Darwin stands out with the largest recent growth and a correspondingly higher MCT number, with Canberra, Melbourne, and Sydney also showing notable movement.

Jeremy cautions against relying on MCT in isolation, reiterating that the DSR3 (the flagship algorithm that combines all metrics) remains the more reliable guide, since no market has ever scored above benchmark on every single metric at once. He explains that MCT specifically has been low for Perth for some time, despite Perth continuing to show good growth potential. Whether MCT should weigh heavily in a decision depends on an investor's strategy: for a shorter-term "get in, get out" approach, Perth remains a reasonable option right now, whereas longer-term investors might look toward markets like Melbourne, even without expecting significant growth in the next year or two. Jeremy notes the DSR3 algorithm is most optimal at forecasting roughly the first three to four years of a market's trajectory.

Damien adds that active strategies like renovation projects can be particularly well suited to markets still showing strong growth, such as Perth, Darwin, or Hobart, since the underlying capital growth adds to returns on top of the renovation itself, whereas renovating in a flatter market is comparatively harder to profit from.

Housing Costs and New vs. Established Dwellings

Citing ABS data, Damien notes housing costs overall rose around 6.5% over the past 12 months, with electricity up around 21%. He expects new dwelling costs to keep rising given ongoing construction cost pressures and trade shortages, and cautions that building a new home requires diligence given the number of subcontractors typically involved and the potential for corners to be cut.

Jeremy contrasts this with established dwellings, where existing issues have generally already surfaced over time, reducing the risk of unexpected problems, compared to an off-the-plan purchase based only on drawings. He notes the performance gap between new and established property has narrowed recently, though established property still outperforms on average. Damien adds that as build costs continue rising, strategies like adding a granny flat to an existing larger block, or eventually redeveloping into townhouses, may become more attractive for investors already holding suitable land.

On rental growth, Damien notes the platform's own data shows rents up 7.4% over the past 12 months across the state capitals, notably higher than the ABS figure of around 3.9% for the same period, and expects rental growth to continue.

House Markets: Monthly Change and Stock on Market

Looking at one-month typical value changes, Hobart, Perth, Adelaide, and Darwin all picked up, Melbourne was flat, and Brisbane, Canberra, and Sydney pulled back slightly. Damien notes single-month figures can be affected by data limitations (for example, listings marked "contact agent" not always being captured), but that the broader three-to-twelve-month trend still shows growth across these markets, with Hobart currently leading.

On stock on market, levels picked up slightly almost everywhere, though remain very low overall. A stock-on-market level of around 1% is generally considered balanced; on that basis, only Melbourne currently looks balanced, with most other capitals marginally undersupplied, aside from Darwin and Adelaide. Damien highlights that percentage changes can mask what's happening in raw numbers. For instance, Perth's stock-on-market percentage was unchanged month to month, but the actual number of listings increased by roughly a thousand, a modest shift given Perth's larger population base, this is why the percentage barely moved despite genuine change happening underneath. Jeremy explains that a stable percentage can reflect an increase in total dwelling numbers offsetting a decrease in listings, or vice versa, and confirms that in this data, townhouses with three or more bedrooms are classified as houses, while smaller ones fall into the unit category. Hobart and Canberra (and to some extent Sydney) saw the number of listed houses fall over the month, with Hobart's listings dropping from 622 to 575, tightening that market further, though Jeremy notes Hobart's small size makes it a volatile market that could bounce back next month.

House Markets: Days on Market and Vacancy

Days on market rose as expected across most capitals, Brisbane from 36 to 45 days, Sydney from 37 to 45 days, with Perth, Melbourne, and Canberra also increasing. Adelaide and Hobart saw slight decreases, while Darwin dropped from 42 to 37 days, still a very tight market overall.

Looking at the six-month change in vacancy rates, conditions remain tight across the board, with Sydney sitting at just 1%, already indicative of a rental crisis, while every other capital is tighter still.

Unit Markets: Growth, Yield, and Vacancy

Turning to units, every capital has seen typical value increases over the past year, led by Perth, Brisbane, and Darwin, with Adelaide close behind. Darwin units currently offer a yield of around 7.5% at a typical value of about $450,000, notably cheaper than the next lowest capital, Hobart, at around $600,000. Jeremy notes that despite units historically being less popular in both Darwin and Hobart, the combination of a 7% yield and 4% vacancy rate in Darwin is a case where the data points clearly toward opportunity, regardless of personal opinions about the city itself, and could suit investors looking to diversify an existing portfolio concentrated in larger capital cities.

Jeremy adds that Darwin's 0.4% vacancy rate is particularly low, even in the context of ongoing commentary describing Darwin as an investor-led market; he explains that if a meaningful share of a suburb's rental stock were landlord-owned and behaving as expected, vacancy would typically be higher and more sensitive to fluctuations, so a rate this low points to sustained genuine rental demand rather than investor-driven oversupply. He also notes Darwin's growth over the past five years sits at 43%, suggesting the market is still comparatively early in its cycle relative to markets like Perth or Brisbane, which have already had larger runs. For longer-term investors (roughly three to six years), that positions Darwin as a market worth shortlisting, particularly given its accessible price point.

On one-year growth, double-digit growth (10%+) is considered boom conditions; on that basis, Sydney, Melbourne, and Canberra are the only capitals not currently in boom territory, with long-term average growth typically sitting around 6 to 7% annually. Melbourne was the only capital to underperform over the past 12 months specifically. Damien notes Melbourne's relative affordability compared to Sydney could still make it a reasonable option for investors starting out, despite its recent softer performance, and that migration patterns tend to show Sydney owners relocating to regional coastal areas upon retirement rather than to Melbourne.

Unit Markets: Monthly Change, Stock, and Vacancy

One-month unit value changes picked up across the board except Melbourne, which was flat, with Darwin showing a notable 5% uplift, though both hosts caution this kind of single-month figure in a small, volatile market could easily reverse the following month.

Stock on market for units was largely flat in percentage terms, though Brisbane picked up around 230 additional units, Darwin around 20, and Perth around 100, while Sydney, Canberra, Melbourne, and Hobart saw slightly less stock. Jeremy notes Darwin's unit market is especially small (around 200 total dwellings), so even modest absolute changes appear more significant in percentage terms, contributing to its volatility.

Days on market for units increased across the board except in Darwin, which continued its recent trend of tightening rather than lengthening. On the six-month vacancy change, Darwin units moved from 1% down to 0.4%, with Brisbane also tightening and Canberra showing a slight easing to around 1.4%, still comparatively higher than other capitals, though Jeremy notes that what would have been considered a balanced 2% vacancy rate a few years ago is now closer to 1% in the current environment.

Key Takeaways

Damien summarises that little has fundamentally changed month to month, with supply remaining tight nationally, and stresses that stock on market, rental growth, and vacancy will continue to be the key indicators to track going forward.

Jeremy adds that viewing the data across the full range of capital cities highlights just how varied the Australian property market is, with some markets booming and others comparatively flat at any given time. He notes that historically there has consistently been an opportunity to achieve strong growth and yields somewhere in the country, and that this variety only increases once regional markets (citing Newcastle, Maitland, Mudgee, Toowoomba, Townsville, Geelong, Ballarat, and Bendigo as examples) and suburb-level differences within cities are factored in, even within an overall "ordinary" performing city like Melbourne, individual pockets can still outperform.

Both hosts push back on broad media narratives suggesting regional markets are heading for a downturn, noting this view isn't supported by the data and can reflect the specific agenda of firms focused only on capital city investment. Damien points to a continued shift toward flexibility, such as investors or owner-occupiers relocating from Sydney to nearby regional areas like Newcastle or the Central Coast, as a factor supporting continued regional strength. Jeremy notes that historically, regional markets have kept pace with capital cities overall, even though timing varies city to city, and references that this has been examined previously in Expert Busting Series episode 11 ("Apples & Oranges: Why All Property Tends to Grow at the Same Rate Long-Term"), which positions regional cities as central to filling the growth gaps that a capital-cities-only analysis can miss.

Damien also raises the importance of money management and cash flow discipline, noting the upcoming August cash rate decision as a significant point of sensitivity for many investors, since even a 1% change in interest rates meaningfully affects available surplus cash flow and could influence investor activity. Jeremy adds that a rate rise remains possible if inflation isn't yet under control, while acknowledging a rate cut would provide welcome relief for cash flow. Both close by encouraging listeners not to be alarmed by negative media commentary, noting that opportunities have consistently existed through past periods of uncertainty, and inviting listeners to share what kind of data they'd like to see covered in future updates.