The most popular suburbs for home buyers in 2024

Australians spent the most money ever buying property last year despite higher-for-longer interest rates and high house prices.

The figures sound another alarm bell on the housing affordability challenge, warn experts who say it is unlikely to be solved by an imminent interest rate cut.

The value of property sales is at a record high.Credit: Jason South

A total of $714.7 billion was spent on property purchases in 2024 – the highest on record, according to figures from property settlement platform PEXA published on Thursday.

The total spend was 17.3 per cent higher than the previous year, and a jump of 64.2 per cent since 2020. About 723,000 properties were settled during 2024.

The report includes $630.7 billion of residential property sales across the five mainland states and $84 billion of commercial property sales, covering 95 per cent of property transactions nationally.

High volumes of properties changed hands in relatively affordable, first home buyer-oriented, outer suburbs – home to significant new development.

The postcode with the most residential sales was Melbourne’s Tarneit in Melbourne, followed by Craigieburn.

In NSW, the most residential sales took place in Marsden Park, then Kellyville.

The figures come as property prices ended the year higher in Sydney despite weakness throughout spring, fell modestly in Melbourne, and boomed in Perth, Adelaide and Brisbane.

Economists are forecasting housing market weakness until the official cash rate falls, which could come as soon as February after signs on Wednesday that inflation was being tamed.

PEXA Group chief economist Julie Toth said a strong jobs market helped underpin property purchases, along with population growth and a drop in average household size.

“This resilience in labour market outcomes has supported the housing market and helped to counteract the ongoing weakness in household disposable incomes,” Toth wrote in PEXA’s 2024 Property Insights report.

“Becoming [or remaining] unemployed is the No.1 risk event that can prevent people from buying a home and/or being able to service their mortgage.”

She said that although a cash rate of 4.35 per cent was a level that many households found challenging, interest rates did remain stable over the year after previous rapid increases. Also, new home construction was not keeping pace with demand.

House prices have remained high despite high interest rates.Credit: Joe Armao

AMP chief economist Shane Oliver attributed the high total value of sales to high housing prices, which meant buyers had to spend larger sums to get into the property market.

That spending had been enabled by savings buffers built up during lockdown, help from the bank of mum and dad and a strong jobs market.

“The high level of interest rates would have normally pointed to less property transactions and lower prices, and we saw that very momentarily in 2022,” he said. “But through 2023 and 2024, property prices nationally went up to record levels.”

Oliver said if interest rates fell – he predicted a cut in February – and the jobs market remained reasonably robust, high total spending on property could probably continue.

“That’s not to say it’s a good thing. It’s a problematic thing because it goes to the heart of the affordability issue,” he said.

“We’re spending a lot of money on property which sometimes shows up as a sign of wealth in Australia, but by the same token is also indicative of the poor affordability of Australian housing – we have to spend record amounts year after year to get into Australian housing.”

First home buyer-friendly suburbs have been fielding demand from potential buyers looking for relatively affordable options.

Raine & Horne Tarneit director Paul Sidana said buyers have plenty of choice in his neighbourhood, which had the most residential sales last year.

“It’s a first home buyer market, and affordability compared to other areas would definitely be a bit lower,” he said. “They tend to get houses around the $600,000, $650,000 price point, versus other areas of town [where] you definitely get a higher price.”

He said drawcards include amenities such as the shopping centre and a train station due to be completed next year, as well as accessibility to the CBD.

It’s a similar story in western Sydney albeit at a higher price point. Ray White Marsden Park real estate agent Luke Harrison said there were plenty of homes for sale in the area, and buyers were attracted to the suburb’s shopping centre and new schools as well as the community.

He said townhouses were on offer from about $800,000 to $950,000, single-storey homes on smaller blocks from $1 million to $1.1 million and double-storey homes from $1.1 million to $1.8 million.

Strong price growth over recent years was another drawcard. He cited a family who sold recently for $1.1 million after buying about five years earlier for $550,000.

“A lot of people are thinking, ‘well, I think it’s still going to make money in the future; I’m happy to go and live there’,” he said.