2024 Property Price Forecasts
Surprisingly, despite persistent rate rises last year, property values across Australia have rebounded and are now either at or near record highs, with some regions even reaching new heights.
2024 Property Statistics
According to CoreLogic's statistics, the median house value in the country fully recovered last year, climbing 8.1% from its January low. This was due to the nationwide housing scarcity and the relatively small number of available properties for sale. The continued impact of increased interest rates on home loans, is anticipated to severely dampen the property market recovery in 2024.
The continued impact of increased interest rates is anticipated to severely dampen the property market recovery in 2024. It is anticipated, however, that the market's weaker circumstances will persist, as seen by the slowdown in price rise and auction clearing rates towards the end of last year. Some analysts are predicting slower growth in 2024, while others are sounding the alarm about the possibility of a double-dip recession.
2024 Price Increase Growth
Gareth Aird, head of Australian economics at Commonwealth Bank, predicts a 5% increase in prices throughout the nation's capitals. Price increases will be gradual, he says, because the most recent rate hike in November brought the cash rate to 4.35 percent, a 12-year high, and will likely keep buyers off the market. Even though he anticipated a small number of distressed listings, it would add to the overall rise.
"The moment rates fall, it will be a boon for prices because lower rates make borrowing more affordable," he stated. According to Aird, rental costs will rise even more due to the supply-and-demand mismatch in the housing market, exacerbating an already severe affordability crisis. It was also probable that investor demand would increase once it became apparent that rates had peaked.
Due to its relatively lower pricing, somewhat tighter labor market, and the tailwinds that come with being the host city for the 2032 Olympics, Brisbane is expected by Aird to have the greatest growth among the cities, with a prediction of 6%. Melbourne and Perth should see a 5% increase in prices, Sydney a 4% increase, and Adelaide a 1% increase, according to his projection.
Adelaide Timbrell, a senior economist at ANZ, forecasts a 6% increase in prices throughout the capitals, with Brisbane seeing a spike of 10%. Perth and Sydney follow with increases of 7 to 8% and 6 to 7%, respectively, while Melbourne is expected to have more muted growth of 3 to 4%.
In 2024, what do the four largest banks expect the value of real estate to be?
Capital city housing prices will rise 6%, according to ANZ. Predictions put Brisbane's rise at 9 to 10 percent, Perth's at 7 to 8 percent, and Sydney's at 6 to 7 percent. Predictions indicate a 3 to 4 percent increase in Melbourne prices. CBA predicts a 5% increase in capital city costs, with minor variances between locations. Sydney is projected to increase by 4%, Melbourne and Perth by 5%, Adelaide by 1%, and Brisbane by 6%.
Prices across the capitals are expected to climb by an average of 5.4%, according to NAB. Forecasts indicate that prices will rise 6.5% in Brisbane, 6.2% in Adelaide and Perth, 5.5% in Melbourne, and 5% in Sydney. By year's end, Hobart values should have remained unchanged.
Capital City Price Growth
Across the combined capitals, Westpac predicts a 6% growth rate. The cities of Perth, Brisbane, Sydney, Adelaide, and Melbourne are all projected to see growth rates between 3% and 8%. After the COVID-19 pandemic She said that the epidemic has exacerbated the housing shortage in Perth and Brisbane, two cities with rapidly expanding populations and somewhat better economies. "For Brisbane and Perth, the disparity between approved construction projects and projected population growth is most pronounced in the last year."
Timbrell predicted that housing costs will remain high due to the influx of international migrants into Sydney and Melbourne, which were already experiencing a shortage of affordable housing and were seeing emigration from other states.
Price Growth Constraints
Although not all homebuyers have felt the pinch of increased mortgage rates, the trend has dampened consumer spending. Additionally, consumers whose purchasing power was unaffected by the increase in interest rates—those whose borrowing limits were far lower—were driving growth. Many individuals are still able to borrow money, and they're stepping up their competition despite this. She stated that the rising prices in that market sector can be attributed to the increased competition for lower-priced residences. Borrowers for investment home loans are also likely able to weight the higher costs against increased in rents on their property investments.
Salary Growth vs House Prices
It will be considerably simpler for households to save in 2024, according to Timbrell, as salary growth should outperform inflation. Together, this and the cash rate's anticipated peak—which she anticipated maintaining until a rate decrease in December—would lead to more price increases. According to Dr. Shane Oliver, chief economist at AMP, price decreases may still be in the cards as long as the cash rate keeps reducing borrowing capacity and biting household budgets.
Certain Price Weaknesses
Through 2024, we anticipate a 5% decline in prices [across the big cities]. "Hobart, Canberra, Sydney, and Melbourne are likely to be the weakest," Oliver said. "At the same time, cities like Adelaide, Brisbane, and Perth have lower debt levels and could manage with stable to rising price growth." as well as from migration across states, especially to cities like Brisbane and Perth.
According to Oliver, a combination of factors, including a larger housing scarcity, reduced listing levels, and high immigration, has contributed to price increase in 2023. In addition to demand from well-off purchasers who are less likely to be impacted by rate rises, such as those with a sizable amount of equity or who receive assistance from their parents' bank. A pool of potential purchasers that he thought had been depleted.
Continued Supply Issues
It appears that the peak in immigration is beginning to pass... He mentioned that there would still be a housing shortage, but that the current affordability limits are causing households to consolidate, which in turn reduces demand. "Prices will fall as a result of a combination of limited buyers and an additional increase in supply, brought about by more distressed listings."
Oliver anticipated a decline in the cash rate during the year's second half, when it had peaked. Given the already high prices and forecasts of a wider economic slump, he believed that any price return based on this would be delayed.
Summary
With some possible price weakness, and dependant on market segments, house prices overall are expected to perform well in 2024. With interest rate rises looking less likely, and even possible rate decreases later in the year, this could spur on further property price growth with larger borrowing limits for buyers, mixed with salary increases.
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