The Australian property market has finally started to show signs of cooling down. But does this spell disaster or opportunity in 2024 and beyond?
While soaring interest rates have worried some homeowners, constraints on new housing supply coupled with strong immigration could buffer any dramatic falls. This article unpacks the push and pull factors, arming you with up-to-date statistics to help navigate 2024 property decisions with confidence.
Where National Property Prices Sit Right Now
There are currently 11.1 million residential dwellings across Australia, with a total value reaching $10.2 trillion according to CoreLogic’s October 2022 update.
So where did the past year take us in terms of property price changes?
Over the year ending October 2022, national home values increased a steady 5.6%. The three months to October saw a slightly slower rise of 2.3%, down from 3.1% in the June 2022 quarter.
Signalling the market may be reaching its peak, monthly growth slowed to 0.9% across the combined capitals in October.
Breaking Down Recent Capital City Performance
Zooming in on the past three months shows some interesting variation between states:
- Perth: 4.6% growth
- Adelaide: 4.2%
- Brisbane: 3.8
- Sydney: 2.5%
- Melbourne: 1.2%
- Canberra: 0.7%
- Hobart: 0.3%
- Darwin: 0.3%
The standout has been Perth, with property values rising 10% over the last 12 months. Sydney followed closely behind at 9% annual growth.
This indicates the two previously lagging markets have shown incredible strength over the past year to catch up to other capital cities.
Signs Growth Is Slowing Across The Board
Back in June, the combined capital cities saw monthly growth peak at 1.3%. The October figure of 0.9% suggests the dizzy property boom may be slowing down.
We need to watch if values continue tracking down heading into early 2024. Some experts speculate the era of rapid, continuous property price increases fuelled by record-low rates could be behind us. But is a crash imminent? We’ll explore a bit later…
First, let’s unpack the current state of housing supply and demand.
Listing Volumes and Days on the Australian Property Market
CoreLogic revealed 41,000 homes were sold across Australia in October 2022. While fewer than the five-year average of 44,813, it shows a rise in sales over the last six months.
New listings hitting the market are also higher across most capitals compared to late 2021 figures, although total advertised stock levels generally remain below last year’s.
The exception is Brisbane, where listing numbers matched October 2021. This could signal some great opportunities for buyers during 2024 in Queensland’s sunny capital.
Nationally, the average time taken for a home to sell increased to 30 days over the three months to October. With stock levels still relatively tight in some cities, low listing volumes combined with strong selling periods point towards continued solid demand from buyers heading into 2024.
What’s Happening in the Rental Market?
For investors, rental yields dropped marginally in October to an average of 3.69% down from 3.71% in September across the combined capitals.
Regional areas are commanding superior yields than capital cities, averaging 4.4% over 3.5% for metropolitan markets.
The top performers based on gross rental yield are the Northern Territory at 5.4% and Western Australia at 4.5%. So 2024 could be an ideal time for investors to consider adding regional houses, townhouses or units to their portfolios in these higher-yielding states.
Interest Rates and Impacts on Property
Now, this is where things get interesting. In November, the RBA lifted the official cash rate to a new high of 4.35%, up from 2.35% in June.
And there are hints of more rises that are still to come in early 2023, as the RBA tries returning inflation to its 2-3% sweet spot by the end of 2025.
What could this mean for property prices as we move through 2024? Will higher mortgage rates deflate the boom and cause prices to plummet?
Buffers Against a 2024 Property Crash
Some bearish experts are foreshadowing value drops of up to 30% as rates continue climbing into dangerously high territory throughout 2023. However, others believe key factors will temper any significant falls over the next two years.
1. Immigration-Fueled Population Growth
In the three months to July 2022, Australia saw a net gain of 100,000 new residents from overseas migration alone as international borders re-opened. Population growth is essential for stimulating housing demand, especially in our two largest cities as immigration intake ramps up further.
2. Limited New Housing Stock
An undersupply of newly completed dwellings continues plaguing the construction sector. Multi-year lags on development approvals compound this issue, acting as a handbrake for flooding more stock into tight markets around the country.
3. The Fear Factor
Some nervous homeowners may opt to sell up in 2023 if rates cause more pain than expected. However, buyer demand remains relatively strong in many areas, limiting excessive listing increases. People tend to overestimate the impact of rising rates on property prices as the fear factor kicks in.
While higher interest rates will dampen borrowing capacities, zoning in on suburbs tipped for population growth can uncover bargain opportunities for buyers less fazed by the doom and gloom chatter.
What This Means for Australian Market Property Decisions in 2024
In summary, the perfect storm of strong immigration, housing scarcity and low financial stress position Australia’s property market landscape for a softer landing than the last cycle back in 2017-19.
Capital city home values are unlikely to collapse during 2024, although expect more modest, single-digit growth levels moving forward. Regional markets offering relatively strong yields and affordable prices should continue outperforming.
For those thinking of selling, connecting with an experienced local real estate agent remains essential to optimize your results. With uncertainty ahead, trusted professionals can provide tailored advice based on hyperlocal demand and market movements.
The property puzzle confronting Australians is complex. But arming yourself with the right insights empowers smarter decisions, whether buying, selling or investing in 2024.
Speak to your area’s leading Professional agent today and find clarity on your next property move. With intimate area knowledge and specialist market expertise, we’ll create a personalised plan optimizing your position as the landscape shifts.
