As we bid farewell to a dynamic year in the Australian property market, the journey into 2024 promises a continuation of intriguing trends and shifts. In 2023, rising property prices defied expectations, unveiling a shortage of listings and surprising even seasoned economists.
Now, as we turn our attention to the new year, experts outline five major trends that will define the property space in 2024.
Australian Property Market Shifts and Projections: Navigating 2024
As we embark on 2024, experts anticipate a further surge in Australian property prices. Projections suggest a 5 to 7 per cent increase in house prices nationwide, with varying rates in different cities.
The median house price in Sydney is expected to rise by 7 to 9 per cent, while Brisbane and Adelaide may experience an increase of 7 to 8 per cent, and Perth, 6 to 7 per cent.
The median in Canberra is expected to rise modestly at 3 to 5 per cent, and in Melbourne and Hobart, the increase is projected to be 2 to 4 per cent.
Any Interest Rate Cuts Could Spark Demand:
Interest rates remain a focal point of discussion, expected to persist at high levels into late 2024. Dr. Nicola Powell, Domain’s chief of research and economics, highlights the potential impact of interest rate cuts on consumer sentiment, predicting increased housing activity later in the year.
A cut in interest rates, while providing relief, could spur activity and create another price upswing. Alternatively, easing the mortgage serviceability buffer is considered an option, potentially accelerating access to the property market.
Buyers Will Be Chasing Affordability:
The Domain report underlines the challenge of affordability as Australia’s median house price reaches its peak. Driven by federal and state incentives, buyers are expected to seek affordable options, potentially leading to increased pricing in certain pockets of the market.
While incentives are welcomed, economists like Peter Tulip caution that they may symbolically push up prices, creating a complex landscape for first-home buyers.
YIMBYs Will Replace NIMBYs:
Domain predicts a shift in housing reforms, transitioning from a not-in-my-backyard (NIMBY) sentiment to a yes-in-my-backyard (YIMBY) approach. Dr. Powell envisions a visionary housing development strategy, possibly involving a reduction in local government powers to facilitate urban densification.
However, experts, including Gareth Aird, stress the need for substantial efforts to address the supply-demand imbalance in the market.
Population-Driven Housing Demand:
Population growth remains a crucial factor in shaping the housing market, and projections suggest a sustained impact in 2024. According to Dr. Powell, immigration, particularly the influx of high numbers of students, is a significant driving force contributing to the heightened demand for housing.
In response to concerns about housing shortages, various solutions have been proposed, including the national cabinet’s ambitious target of building 1.2 million homes. This initiative aims to alleviate pressure on housing supply and address the increasing demand in the market.
Rental Markets Reach a Tipping Point:
With property prices on the rise, the rental market is expected to witness longer tenures for tenants.
Domain’s report indicates a surge in rental prices across the country, driven by population growth. Dr. Powell predicts a tipping point where rent rises will ease, especially as more renters consider shared housing options.
State and federal incentives may entice prospective first-home buyers out of the rental market.
Conclusion:
As the Australian property market strides into 2024, the trends outlined by experts paint a dynamic picture. From interest rate dynamics to shifting buyer preferences and the impact of population growth, staying informed is paramount for those navigating the evolving real estate landscape.
As the year unfolds, keeping a close eye on these trends will be essential for making informed decisions in the ever-evolving property market landscape.
The property market is poised for an eventful year, offering both challenges and opportunities for investors, homebuyers, and renters alike.
