If the two certainties in life are death and taxes, for Australia you can add a third – our fascination with housing prices.
Depending on where you are on the property ladder, this can mean deep satisfaction or grim reality. So what can you expect in the year ahead?
Well, bad news for anyone looking for a bargain, because it’s not a matter of if there will be a price rise, but how much.
Commbank is predicting dwelling prices to rise by a further 5 per cent in 2024, following 9.6 per cent growth since February 2023. While Realestate.com is more conservative, predicting a 2.7 per cent growth nationally.
Units on fire
Realestate.com also predicts the percentage increase for units and apartments will outpace houses as the affordability crisis continues to bite.
Property prices continued to rise across Australia, despite the Reserve Bank of Australia lifting the cash rate to a record 12-year high in an attempt to cool the market. The cash rate now stands at 4.35 per cent.
According to Realestate.com’s PropTrack, the national annual housing price grew by 5.5 per cent for a median value of $762,000. Leading the pack was Perth with a growth of 14.75 per cent, while Hobart had a 3.5 per cent decline in prices.
Perth’s astonishing growth is being attributed to its rapid population growth and low unemployment rate, with an underlying bottleneck in construction pushing demand further.
However, according to economic forecaster Oxford Economics Australia, while the market has rebounded, 2024 will not match last year’s growth.
The group released its Residential Property Prospects report last week.
Factors fade
“The positive factors supporting price growth in 2023 have started to fade,” the report said.
“Auction clearance rates have softened from 70 per cent to near 60 per cent, while monthly price growth has moderated, with some capital cities recording negative quarterly results.”
Oxford Economics predicts the market should pick up later in the year.
“Interest rate cuts from late 2024 should boost credit availability, accelerating broad price growth once again,” report author Maree Kilroy says.
Property adviser Michael Yardney says a ‘mismatch’ of supply versus demand continues to drive prices.
He also attributes the solid market to a relatively strong economy, the belief that interest rates are near their peak and a return of international demand for Australian property.
Target your investment
Mr Yardney says that while growth is easing, investors need to hone their target location.
“The good news is that if you don’t like the outlook for what property will do on a national level, you can always beat it by investing in the right property in the right location,” Mr Yardney says.
He says investors should look at quality properties in locations that will outperform in the long term such as gentrifying suburbs.
Commbank claims a slowdown in net migration, combined with consistent and co-ordinated measures to increase housing supply, will be critical to restoring some balance to the Australian housing market.
The rental market continues to be squeezed by demand, with the vacancy rate at 1 per cent.
“Rental affordability has deteriorated over the past two years,” Ms Kilroy says.
“This is especially evident in Sydney and Adelaide, which is forcing larger rental households to be formed.”
Do you hope the market goes up or down? Why not share your opinion in the comments section below?
Also read: Industry expert explains five mistakes that will affect a home’s sale price
