Australia’s Property Market: Peaks, Troughs, and the Road Ahead in 2024
The Australian property market experienced a dynamic shift in 2023, marked by a significant rebound in property values, yet faced challenges that point towards a more complex scenario in 2024.
According to Peter Hannam in his article, “Australia’s property market faces fresh peaks and troughs with slowing prices and interest rates tipped to drop,” the national home value index witnessed an 8.1% increase in 2023, a stark recovery from the previous year’s 4.9% decline. This change, however, falls short of the dramatic 24.5% surge in 2021. Hannam notes, “The rebound of the market in 2023 defied many predictions, not least because the Reserve Bank kept lifting interest rates, actions that typically drag on property prices.”
The variations were not uniform across cities. While Perth, Adelaide, and Brisbane hit record highs, Sydney and Melbourne observed more modest increases. CoreLogic’s research director, Tim Lawless, anticipates complex price trends in 2024, suggesting that “rate hikes are probably done” and predicts growing speculation of rate cuts in the latter half of the year.
Helena Burke, in her article “Property values bounced back across Australia in 2023, but there are signs of slowing,” highlights the disparate growth rates across different cities. While Perth enjoyed a 15.2% surge in property values, Hobart saw a 0.8% decrease. She points out the stronger performance of capital cities over regional areas in terms of value increase. Burke quotes Lawless, “A rate hike in June and another in November, along with persistent cost-of-living pressures, worsening affordability challenges, rising advertised stock levels, and low consumer sentiment, have progressively taken some heat out of the market through the second half of the year.”
Additionally, both articles emphasize the impact on renters and potential buyers. Rents have increased nationally by 8.3% in 2023, with Perth experiencing the most significant rise. The share of income going to rent remains at near-record levels, offering little relief for tenants.
Michael Fotheringham, managing director of the Australian Housing and Urban Research Institute, cited in Burke’s article, expresses concern for young people and first home buyers, stating, “It’s all the harder now. They have to save even more, they have to live more frugally, and be more creative to try and save the money to get a deposit.” He advocates for more shared equity programs and construction of more homes to address the housing crisis.
In conclusion, while the Australian property market has seen a rebound in 2023, the outlook for 2024 remains uncertain with potential for rate cuts, varied regional growth, and continued challenges for renters and first-time buyers. The market appears to be at a crossroads, with economic pressures and policy responses set to shape its trajectory.
References:
https://www.abc.net.au/news/2024-01-02/australia-house-pricing-home-value-index-2023/103278170
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