Australian Property Market Outlook in 2024 – Forbes Advisor Australia

Australian Property Market Outlook in 2024 – Forbes Advisor Australia

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Powell said this year’s growth cycle was in defiance of the 13 rate hikes enacted over 2022-2023 that brought the official cash rate to 4.35% by year’s end.

“What subsequently unravelled over this past year was a reverse of expectation that defied logic—as a shortfall of housing supply collided with rapid population growth, a strained construction sector and the tightest rental market on record—and Australian property prices rose.”

She expects continued growth in house and unit prices into 2024 of between 5% to 7%, but warns of “an intricate dance of economic forces influencing the property price in Australia”. Upward price pressure could come from continued population growth and undersupply, counterbalanced by financial stressors facing buyers that could weaken demand.

Economic forecasts for 2024 include modest GDP growth, the continuation of a tight labour market, and a gradual slowdown in inflation, with many pundits predicting rate cuts to begin from late 2024.

Head of research at CoreLogic, Eliza Owen, anticipates a year of two halves, with 2024 starting with weaker performance as people wait to see how the RBA moves on the cash rate.

“However, if the second half of 2024 sees a reduction in interest rates, there could be a slight recovery in buyer demand,” she said.

“This year of two halves could ultimately balance out to a modest growth rate over the calendar year.”

Upward price pressure could come from continued population growth and undersupply, counterbalanced by financial stressors facing buyers that could weaken demand

Owen said the problem of stretched budgets frustrating some buyers wouldn’t be quickly solved, with rate cuts not likely to be substantial enough to bring down the portion of mortgage payments to household income within comfortable levels.

“We estimate mortgage rates would have to decline 146 basis points to bring serviceability down to 40% of median income for the median dwelling value, and 410 basis points to bring serviceability down to 30% of income,” she said.

“So affordability will continue to be a challenge for buyers in the year ahead.”

The average property price increase forecast across the four major banks is 4%, with Sydney, Brisbane and Perth expected to experience slightly higher growth

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