️ Highlights:
1. The PropTrack Property Market Outlook Report predicts that national property prices could rise up to 4% over 2024, with some capital cities experiencing up to 8% growth.
2. The trends that drove price increases in 2023, such as low stock levels and high buyer demand fueled by population growth and a housing shortage, are expected to continue in 2024.
3. Sydney and Melbourne are expected to see more subdued price growth compared to Brisbane, Adelaide, and Perth due to imbalances between supply and demand.
4. The planned stage three tax cuts, set to take effect in mid-2024, could further fuel demand for housing as higher income earners have more disposable income.
5. Despite higher interest rates reducing borrowing capacities and housing affordability, a large depreciation in prices over 2024 is unlikely due to the resilient housing market, limited forced sales, and continued demand.
Analyzing the Forecasted Growth in Property Prices Across Key Cities
The latest PropTrack Property Market Outlook Report presents a promising forecast for the Australian housing market in 2024. National property prices are expected to rise up to 4%, with some capital cities potentially seeing an increase of as much as 8%. This growth, albeit slightly slower than the 5.5% pace recorded in 2023, is driven by factors such as stage three tax cuts, soaring population growth, and a lagging housing supply.
Key Factors Influencing the Market
Cameron Kusher, PropTrack’s director of economic research, identifies several factors contributing to this anticipated growth. The persistently low levels of stock available for sale, coupled with a significant increase in buyer demand, have been fueled by a housing shortage and robust population growth. Over the 12 months leading up to March 2023, Australia’s population increased by 563,205 persons, equivalent to the entire population of Tasmania.
Regional Variations in Price Growth
While the national growth rate is set to slow, the forecasts vary across different states and territories. Sydney and Melbourne, where listing volumes have returned to above the decade average, are expected to see more subdued growth. In contrast, Brisbane, Adelaide, and Perth, where supply remains extremely tight, are likely to lead the country in home price growth. Sydney’s prices are forecast to rise between 2% and 5%, while Melbourne could see growth of between 1% and 4%. Perth, Adelaide, and Brisbane are expected to experience increases of 5% to 8%, 4% to 7%, and 3% to 6%, respectively.
Impact of Interest Rate Hikes and Economic Indicators
Despite the Reserve Bank of Australia holding interest rates steady in its final meeting of the year, the previous 13 rate hikes have significantly impacted mortgage repayments and borrowing capacity. This has led to a reduction in household spending, as evidenced by the household savings rate falling to its lowest level since December 2007.
Outlook for 2024: Regional Resurgence and Market Influences
The report anticipates a regional resurgence in 2024, driven by deteriorating affordability in capital cities. This trend is expected to continue, with the supply of homes for sale predicted to remain subdued relative to buyer demand. Additionally, upgrading homeowners are likely to take advantage of large equity boosts, while first-home buyers may remain on the sidelines due to rapidly rising interest rates. The tight rental market is also expected to underpin house growth, encouraging those with the means to step into homeownership.
Conclusion
The Australian housing market is set for another year of growth in 2024, with certain cities poised to outperform others. This forecasted growth, influenced by a combination of economic factors and market dynamics, presents both challenges and opportunities for buyers, sellers, and investors in the real estate sector. As the market continues to evolve, staying informed and adaptable will be key to navigating the Australian property landscape in the coming year.