2023 was a rollercoaster for the property market in Australia, with significant factors like the after-effects of COVID-19, a major increase in population, interest rate increases, inflation, and the natural fluctuation of the property market all playing out across the year. However, the saying “the only way is up” is ringing true. As we come to the end of the year, indications are that Australia is coming out the other side, and things are starting to look more positive.
Here, we reflect on the year that was, set our sights on some property highs that we expect to hit in 2024, and look at what you can do to be prepared to enter the market.
The property market in 2023 – a recap
January was a rough month for the property market and the economy in Australia. The first month of the year saw home prices continue to decline and reach record-breaking lows. The imminent threat of interest rate rises from the big banks sparked concern of a potential recession, and safe to say, it wasn’t a particularly great start to the year.
Things started to look up in March, with housing values showing signs of stabilisation for the first time in many months. This continued to improve as Australian house prices recorded their first quarterly lift since May 2022. CoreLogic data revealed that the combined capital cities market value rose 0.7%, and clearance rates were much more robust than those in 2022.
Although this was positive for those looking to sell, for renters, turmoil was boiling. The rental crisis was worsening across the country, with renters having to fork out a higher proportion of their incomes (nearly 60% in some cases) to service rental leases. Why was this happening? Simply because of a lack of supply and surging demand for properties. This did not ease quickly, with rental vacancies remaining tight throughout June. From here, we saw regional and lifestyle-based areas decline in housing values, typical of their annual cycle, but incremental growth throughout Australia’s capital cities.
By the end of August, the Australian property market had rebounded to $10 trillion in value. Although property values continued to rise through 2023, interest rates and mortgage stress did not waiver, which has continued to put pressure on Australians in the property market.
Though this is the case, economists and property experts have good news on the horizon for 2024.
What can we expect in 2024?
Whether you’re a renter, seller, first home buyer or investor, the outlook for the property market in 2024 is looking much brighter. There’s been a significant turnaround from previously grim predictions, and both Westpac and NAB have released new forecasts that tell a far more promising story for the coming 18 months. Here’s why:
- FOMO-driven buyer demand
Many commentators like the AFR believe that first time buyers and investors are being hit with a severe case of FOMO (fear of missing out). With the rollercoaster of 2023, there’s a fear that property prices will only get higher and interest rates won’t lower, meaning for many, their chance to get their foot in the property market door is getting tighter and tighter.
- Decreases in rental prices
With interest rate cuts set to see fruition in early to mid-2024, and an increase in internal migration, many predict rental prices could decrease, taking the pressure off a much-overheated rental market. Rental affordability has stretched throughout 2023, and with income levels not keeping pace, we’ve likely seen a ceiling on attainable rental prices.
- Continued population increases
Australia has seen a major increase in population growth throughout 2023, with record numbers of New Zealanders crossing the ditch, returning international students, and other migrants seeking greener pastures post-COVID, with lifestyle serving as the main reason for a move to Australia from most other countries. Population growth is positive for the property market, as we see demand to buy, rent and invest.
- House prices on the rise
A continued rise in house prices due to population increases and buyer demand is predicted in 2024. With growth in new dwellings lagging (partly due to surging construction costs), the supply of new stock is unlikely to keep up with demand. According to Domain’s projections, we could see substantial increases in housing prices in Sydney, Adelaide, and Perth by the conclusion of 2024, and a “well-established and steady recovery”.
Predictions aside, continued research and expert advice are your best allies
As property expert and author Lloyd Edge says, “There’s always a good time to invest based on getting the right property at that right price”. Whether you’re seeking out an investment property, first home or next home, it comes down to researching with tools like First National’s Your Patch, keeping a close eye on the latest market shifts, and getting educated on the ins and outs of successful property investment.
Ultimately, it is unknown what the actual outcomes will be for 2024, so it’s essential to understand the current market and keep your ears to the ground as changes come to hand. If you need more support and expert guidance, your local First National Real Estate team can help you make the right property decisions and start 2024 on a high. Get in touch today.