As we navigate through the early months of 2024, you might be wondering what the future holds for Australia’s property markets.
After all, the past year has been a rollercoaster ride from the monthly ‘will-they-won’t-they’ speculation on the Reserve Bank of Australia’s (RBA) interest rate decisions to the surprising strength in national property prices.
In this blog, we’ll explore six key predictions and insights for the coming year.
Despite earlier expectations of a downturn, Australian property values rose 8.1% in 2023, according to CoreLogic.
This trend, albeit at a slower pace, is forecast to persist in 2024, with PropTrack’s latest property market outlook report anticipating national price growth of up to 4%. As the image below shows, some capital cities, such as Perth, might even experience growth up to 8%, with the growth underpinned by strong demand, limited stock for sale and a potential stabilisation in interest rates.
Undoubtedly, one of the biggest stories of 2023 was the sharp rise in interest rates with the cash rate reaching a 12-year high of 4.35% as the RBA sought to bring inflation back to its target range of between 2-3%.
But in good news, many economists believe there will be no further increases in 2024 – especially after the latest data from the Australian Bureau of Statistics showed inflation rose 4.3% in November from a year earlier, the smallest annual increase since January 2022.
Better yet, Australia’s largest mortgage lender, CBA, is forecasting three interest rate cuts in 2024 starting in September. These would take the cash rate back to 3.60% by the end of the year, improving borrowing conditions for buyers and easing the pressure on mortgage holders.
Australia’s housing supply remains a critical issue, with ABS data showing new dwelling approvals were close to decade lows in November. This ongoing shortage of new housing will likely continue to impact both the buying and rental markets.
Tenants faced a tough market in 2023, with rental prices soaring by as much as 20% over the year due to high demand and limited supply, according to PropTrack. While rental growth in Australia as a whole is likely to slow, rents in major cities are likely to continue rising.
This could further encourage people to consider buying their homes, a decision supported by potentially lower mortgage rates.
While many investors exited the market during the pandemic, there’s been a recent resurgence, with ABS data showing the value of new investor loans in November 2023 was 18.0% higher compared to November 2022.
This trend is expected to continue in 2024, driven by the increase in rental prices and the improving interest rate environment.
First home buyers have been navigating a challenging landscape over the past 12 months, with the cost of mortgages often exceeding renting due to higher interest rates. However, the current tight rental market conditions combined with the prospect of mortgage rate stabilisation could encourage more renters to step into home ownership. Government assistance schemes at the federal and state levels should support this trend.
Looking to buy a home in 2024? Whether you are a first home buyer, property investor, downsizing or upgrading, Shore Financial can help you get a home loan. To discuss your options, call us on 1300 416 700, email us on info@shorefinancial.com.au or fill in this online form.
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