The 2024 Outlook for Australian Real Estate

January 26, 2024

The Australian real estate market continues to rise overall. This trend persists despite interest rate hikes, the fixed rate mortgage cliff, repeated predictions of a downwards market correction, and some isolated and short-term pockets of decline. The sharpest price rises in years were recorded in some cities in 2023. 

Housing Prices Expected to Hit a Record High in 2024

Domain’s 2023 End-of-Year Wrap and 2024 Outlook report predicts continued growth in both house and unit prices in 2024, as demand is fuelled by migration-driven population growth and a possible cut in interest rates. Both house and unit prices are expected to rise in all state capitals (except in Hobart, where unit prices should remain steady), as well as in the Gold Coast, Sunshine Coast, and eastern state regional areas. 

Sydney is expected to lead the pack, with anticipated house price rises of 7-9%, closely followed by Adelaide and Brisbane at 7-8%. Similar strong growth is predicted for the Gold Coast, while Perth and the Sunshine Coast are predicted to see sturdy increases in house prices, but more sedate gains in units.

Lower Interest Rates May Drive higher Activity

Mortgage holders with variable rate loans have been hit with 13 rate hikes in the past 18 months. But economic analysts continue to predict that inflation will be corralled by the latter part of 2024, and that interest rates will consequently start to fall. The result is likely to be an increase in housing demand when more people become able to service a mortgage, driving prices further upwards. 

At the same time, the Australian Government’s Help to Buy shared equity scheme will turn many renters into potential buyers, further accelerating housing demand. 

Purchasing Property is Taking Longer

It’s taking longer than ever before for hopeful buyers to get their hands on a home. A process which used to take weeks or months can now be stretched to a year for several reasons: 

1. Competition adds to length of search period 

In a competitive market, it’s unlikely buyers will be able to purchase one of the first few homes they see. More time needs to be spent searching for the right property or waiting for it. Compromising, instead of insisting on perfection, may pay off for some buyers. 

Lenders are obliged to apply very strict lending criteria when assessing loan applicants’ eligibility. They will review applicants’ income, employment status, existing debts, credit score, savings history and deposit amount before reaching a decision, meaning that approval can take between four and six weeks.

Buying a home is an even bigger financial commitment than it was in years gone by, so purchasers are understandably careful when it comes to the settlement process. Builders’ inspections, sales contract negotiations, title checks, organising insurance and final inspection all contribute to the time that elapses between agreeing to purchase and the settlement date.

What the Market Means for You 

• For Investors: Investors can seize the opportunity for potential capital appreciation as Australian housing prices are set to reach record highs in 2024. Sydney, with expected house price rises of 7-9%, stands out as an attractive destination for property investment. The possibility of lower interest rates by the end of 2024 adds to the appeal, creating opportunities for rental income and long-term gains. 
• For Buyers: Buyers should be prepared for a competitive market, which may extend their property search. Patience and flexibility are key, and the prospect of falling interest rates in late 2024 could make homeownership more attainable. Government initiatives like ‘Help to Buy’ can also help renters in becoming homeowners. 
• For Sellers: Sellers can benefit from the robust real estate market, with the potential for substantial returns, especially in high-demand areas like Sydney, Adelaide, and Brisbane. To secure the best deal, sellers should remain aware of market dynamics when setting their asking price. 

Your broker is a reliable resource in a changing market

When you need some helpful advice about the best types of mortgage finance available to you in an uncertain market, turn to your broker, who has all the details at their fingertips.

This information is for general information purposes only. The information contained herein does not constitute financial or professional advice or a recommendation. It has not been prepared with reference to your financial circumstances or business and should not be relied on as such. You should seek your own independent financial, legal and taxation advice as to whether or not this information is appropriate for you.