Australian Real Estate Outlook for 2024: Impact of Interest Rates and Rental Market Dynamics

The Australian real estate landscape in 2024 is set to be significantly influenced by interest rate changes and the rental market dynamics, as highlighted in two recent reports. A survey conducted by CoreLogic, a leading property data and analytics provider, and a report by PropTrack provide valuable insights into these trends.

Interest Rate Changes and Real Estate Market

According to CoreLogic’s report titled ‘Decoding 2024: Real estate’s trends and goals revealed,’ 71% of real estate professionals believe that interest rates will have the most significant impact on the housing market in 2024. This survey, which involved over 1,400 professionals, indicates a strong belief that rising rates will significantly influence the market, while a smaller portion anticipates an impact from falling rates.

Eliza Owen, CoreLogic’s Head of Residential Research Australia, notes, “The broad expectation for housing values in 2024 is growth, but at a slower rate.” She further explains that economic pressures such as high living costs, taxes, and interest rates are reducing savings for housing purchases, affecting market demand. Nonetheless, she remains optimistic, citing ongoing construction constraints as a factor likely to sustain home values.

Dirk Miller, CoreLogic’s General Manager – Real Estate Solutions, echoes this sentiment, highlighting mixed feelings in the industry about the current economic conditions. He emphasizes the importance of deepening customer relationships and leveraging databases for business success in 2024.

Australian Rental Market Conditions

The PropTrack Rental Report, authored by Cameron Kusher, reveals a challenging situation in the rental market. The report shows that rental listings on realestate.com.au in December hit a 30.2% decrease compared to the decade’s average for the same month. This shortage has led to a significant surge in rental prices.

Kusher comments, “The rental market is characterised by low supply and strong demand.” He also mentions the difficulty for renters to save for a property due to higher rents and interest rates. Maiy Azize from Everybody’s Home highlights the toll of rising rents on Australians, criticizing government policies for not making housing more affordable.

Conclusion

The real estate market in 2024 is expected to be heavily influenced by interest rate fluctuations and a tight rental market. Industry professionals are adapting their strategies to navigate these challenges, focusing on customer relationships and database optimization. Meanwhile, the rental market’s supply-demand imbalance continues to pose difficulties for tenants and potential homeowners alike.

References:

“Interest rate changes tipped to shape 2024 real estate market,” by Core Logic. https://www.corelogic.com.au/news-research/news/2024/interest-rate-changes-tipped-to-shape-2024-real-estate-market 

“Australian properties for lease fall to record low as rents soar,” by Cait Kelly. https://www.theguardian.com/australia-news/2024/jan/30/australian-properties-for-lease-record-low-rents-soar-proptrack-report