What to expect from property in 2024
One of Australia's leading property economists, Ray White Group Chief Economist Nerida Conisbee, has given 10 insights about what to expect from the property market this year.
Price growth will continue. Market forces will lead to further price growth in 2024, according to Ms Conisbee. “At this point, housing supply remains extremely low and many people that would be new home buyers are being pushed into the established market. Big jumps in rents are pushing more first home buyers into the market and population growth is continuing to be strong,” she said.
The luxury apartment market will soar. “Demand is increasing for much larger, higher quality, more expensive developments,” Ms Conisbee said. “This year, fewer apartments being built, growing population and a desire to live in some of Australia’s most sought after inner urban areas will lead to a boom in luxury apartment demand.”
Buyers will snap up seachange homes. Ms Conisbee said some beachside holiday destinations are underpriced, because a lot of people who bought during the pandemic have sold in recent times, driving down prices. “While prices are much more affordable, it may not last long with housing shortages a problem in many of these highly desirable parts of the country,” she said.
Interest rates will peak. “Inflation remains persistent but is starting to come down. This means we may see another rate rise in 2024, however it does look like interest rates are either at peak, or very close,” Ms Conisbee said. “While it is good news, the bad news is that we are unlikely to see a rate cut until late 2024 or early 2025.”
Housing supply will remain a hot issue. Ms Conisbee said Australia is “a world leader in not building enough homes and this is the key reason why housing is so expensive.” As a result, supply will remain a major policy focus in 2024.
Rental growth will slow. “With household size increasing again, we are starting to see a stabilisation in rents, however it will take some time for new home development to catch up,” Ms Conisbee said.
Investor numbers will remain low. One reason rents have been rising is because the vacancy rate is so low. Ms Conisbee said rental supply will remain an issue this year, due to limited investor activity. “Interest rates are too high and there are a lot of impediments to owning a rental property relative to other investments. While this should improve marginally in 2024, there will remain a shortage,” she said.
The investor landscape will change. With fewer people in the office, commercial property has become less desirable, which has driven some institutional investors to the residential sector. “Spanning build to rent, retirement living, aged care and land lease, the ‘living’ sectors are hot property, driven by a shortage of homes and population growth. In the next 12 months and beyond, your landlord may be the company that previously owned the office building you worked in or the shopping centre you visited on the weekend,” Ms Conisbee said.
More people will live alone. Ms Conisbee said long-term social and demographic shifts are leading to an increase in the number of people living alone. “Changing lifestyle preferences, delayed marriage and an ageing population are contributing factors,” she said.
Homes will become greener. Environmentally friendly homes will become more popular, according to Ms Conisbee. That's because they're not only cheaper to run but safer, as they're more likely to be cooler in summer and (for those who cook with electricity rather than gas) provide better respiratory and cardiovascular health outcomes.