Brisbane’s home values are now the second highest in the country, only behind Sydney. Property in Perth has increased value by 24.1% in the past 12 months, and Adelaide has also seen massive growth with a 14.8%. 

The latest CoreLogic Monthly Market Report showed that homes in Brisbane, Adelaide and Perth are still at record highs, as was Sydney until only recently. The market strength in these cities and states goes against what was thought to happen when interest rates surged past 6% and the RBA’s cash rate climbed to 4.35%, which it has now been for a full year.

By why is this?

The answer is incredibly nuanced with a number of political decisions such as negative gearing, zoning restrictions and first home owner concessions. However, in Queensland and Western Australia markets, the data points the extreme growth in one clear direction: investors. 

Recent CoreLogic data revealed Queensland and Western Australia dominate Australia’s list of Top 100 rental yield suburbs for both houses and units. For units, Queensland and Western Australia made up 77 of the top 100 suburbs, while for houses they made up 76. 

In both states, major infrastructure developments and mining activity drive high rental yields in regional markets. Relative to the two traditionally key markets of Melbourne and Sydney, Brisbane and Perth have been viewed as more affordable markets with better value for money. The additional benefit of a strong rental yield is one factor which has seen prices in both cities continue to climb. 

Another change was the Victorian Land Taxes earlier this year. The changes had three key points which have drastically affected the nation’s investor activity:  

Increased Rates: From 1 January 2024, Victoria has implemented higher land tax rates, particularly affecting properties valued over $3 million. For instance, land valued above $3 million now incurs a tax of $31,650 plus 2.65% of the amount exceeding $3 million. 

Absentee Owner Surcharge: The absentee owner surcharge has doubled from 2% to 4% for the 2024 land tax year, significantly impacting foreign investors. 

Vacant Residential Land Tax (VRLT): Effective 1 January 2025, the VRLT will expand to cover all residential properties across Victoria that remain vacant for more than six months in a calendar year, broadening its scope beyond inner and middle Melbourne suburbs.

While the Victorian Government has implemented these changes, the Queensland and Western Australia State Governments have committed to schemes driving investors to affordable housing options. These include the QLD and WA built-to-rent schemes, which both look at cutting land taxes for investors building affordable housing. 

All of these factors have contributed to high investor activity in QLD and WA. According to CoreLogic data, new loans made up 40% of new lending in QLD and 37.1% in WA for September. By comparison, Victoria was 31.7%.

Additionally, Brisbane’s economy has been bolstered due to its close proximity to the South-East Pacific, while Perth’s economy continues to be strengthened by the mining sector. These factors have helped ensure the strength of the overall real estate markets, despite interest rates and the cash rate. 

Fortunately for people looking to get into the market, government incentives remain plentiful. There have never been more grants or schemes available than what there is now, so don’t be disheartened by investor activity. Your first home could be right around the corner!

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