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For most of the year, one group of buyers appeared to be the most active in the market. But as the year draws to a close, another cohort has taken the lead.
CBRE’s Residential Valuer Insights report for Q4 2024 has revealed that the number of buyers selling their homes to upgrade to larger and more expensive properties has outpaced first home buyers (FHBs) as the most active buyer cohort.
In a nationwide survey of 155 CBRE residential valuers, the report found that 64 per cent of respondents identified “upgraders” as an active buyer group over the last three months, marking a significant increase from 53 per cent in the previous quarter.
This shift in market sentiment saw upgraders surpass first home buyers as the leading buyer group for the first time this year. However, as valuers were able to nominate multiple buyer types, the report also noted that 62 per cent of CBRE valuers still identified first home buyers as an active cohort, maintaining a similar level to the last three quarters.
While local investors and downsizers also displayed high levels of market activity over the last three months, the survey showed that developers and recent overseas migrants were the least active buyers this quarter.
The report also highlighted a slight increase in demand for recently renovated properties, with 45 per cent of CBRE valuers noting increased demand, up from 44 per cent in both Q2 and Q3, though slightly down from the 48 per cent recorded in Q1.
Contrastingly, interest in unrenovated properties remained low over the quarter, with 43 per cent of respondents reporting a decline in demand for unrenovated properties, holding roughly steady with the 44 per cent reduction in Q3.
Easing demand over 2024
The firm observed that demand for residential property has moderated further over the quarter, with the highest proportion of CBRE valuers (47 per cent) describing demand as “moderate” over the last three months, reflecting a balanced market outlook.
The report also highlighted that 34 per cent of CBRE valuers described demand as being “strong” or “very strong” over the quarter, representing the lowest level of the year compared to 42 per cent in Q3 and the annual peak of 54 per cent in Q2.
Across the nation, the firm highlighted that Adelaide and Perth have consistently recorded the highest demand for residential property in every quarter of 2024, while Melbourne has continuously exhibited the lowest demand over the year.
Unpacking the conditions behind these variations in demand, CBRE’s residential valuations national director, Kat Hale, linked the divergence to “buyer demographics and locational trends”.
“Melbourne has seen less demand from investors due to tax changes and proposed landlord rental standards. This has fuelled increased investor activity in both Adelaide and Perth,” Hale said.
Market expectations for 2025
Looking towards the coming year, the firm reported that 55 per cent of surveyed valuers anticipate house value growth in 2025, marking a decline from the peak of 78 per cent recorded in Q1 of 2024.
Despite this reduced optimism, CBRE stated that 32 per cent of valuers still expect price values to remain stable, with the markets of Perth, Adelaide and Brisbane Metro expected to see the most growth over the next 12 months.
In terms of housing supply, two-thirds of surveyed valuers anticipated an increase in available stock over the next year, with Canberra and the Sydney Metro markets expected to lead this supply boost.
However, buyer demand is still widely forecast to soften, but will remain strongest in the Sydney Metro, Sydney Outer Metro, and Melbourne Metro markets.
Speaking on the expected makeup of buyer demand heading into 2025, CBRE’s Pacific head of research, Sameer Chopra, said that “until we get meaningful interest rate cuts, I expect upgraders and first home buyers will continue to dominate demand”.
Nevertheless, Chopra noted that “down the track, the downsizer and investor market could become more active once there is more confidence in demand and pricing”.
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