Property Prices to Reach New Heights – Insights for 2024

Market insights

The fact that NAB revised its initial forecast of 4.7% growth in 2024 to a more bullish projection of 8%, is indicative of the current state of the Australian property market. Across Q1 – Q3 2023 we have seen a consistent increase in demand for property, with record low supply levels meeting this demand.

The combination of rising population and limited availability of rental properties has led to a competitive rental market and subsequently, higher rental yields.

According to CoreLogic data, rental growth is outpacing the decade average by almost three times. Despite this, the forecast for rents in the next 12 months to 2 years has slightly eased to a healthy 3.0% in Q3. The good news is that rents are expected to continue growing across most of the country and in most segments.

With construction costs peaking in Q1 2023 before easing somewhat in Q2,  there is still concern about the supply of new properties entering the market. Combined with rising interest rates, it is likely that rental growth will continue to outpace overall property price growth in the near future. What is clear is that the Australian property market remains a strong investment opportunity.

Market price trends in major cities

Key findings from the October 2023 PropTrack Report indicate that Australian home prices continued their upward trajectory, experiencing a significant increase of 0.36% month-on-month. This surge propelled prices to reach a fresh price peak, reflecting the robustness of the housing market. In comparison to the previous year, national home prices have exhibited a remarkable growth of 4.54% year-on-year. This resurgence signifies a notable reversal from the rapid decline witnessed in 2022, as home prices have rebounded by a substantial 4.93% since the low point in December 2022. These findings highlight the resilience and strength of the Australian housing sector in the face of changing market dynamics.

Here are the price growth levels for houses and units across major Australian GCCSAs (Greater Capital City Statistical Areas):

2024 Property market predictions

Australia’s property market has almost fully recovered from the recent downturn and is now mere thousands of dollars away from record highs. The resiliency and strength of the Australian housing market has led its remarkable resurgence following the 2022 downturn.

House prices are within just $2,000 of smashing previous records. Not to be outdone, apartment prices are also expected to soar by an impressive $5,000 in various capital cities by the close of 2023, indicating the continued growth and confidence in the property market.

With this promising outlook, what can we expect for the property market in 2024?

Continued growth in prices

The property market is expected to maintain its upward trend, with further growth predicted for both house and apartment prices in 2024. The increased demand for housing, combined with limited supply, will continue to drive prices higher.

Record-breaking numbers

2024 is expected to break all previous records in terms of prices and sales volume. With a strengthening economy and increased consumer confidence, the property market is set for a booming year.

Increase in construction

The demand for housing is expected to lead to an increase in construction. This will provide a boost to the economy and create job opportunities in the construction industry. However,

there may be challenges in meeting this demand due to supply chain issues and rising costs of building materials.

Infrastructure spending

The government’s commitment to infrastructure spending is expected to have a positive impact on the property market. Major infrastructure projects will drive development in areas such as transport, healthcare, education and recreational facilities, making certain suburbs even more desirable.

Summary

In 2024, the Australian property market is poised for unprecedented growth. With an anticipated 8% surge by year-end and an additional 5% increase in 2024, totalling a remarkable 13% growth over two years, the market presents a lucrative opportunity for investors. The robust performance is attributed to population growth and an optimistic economic outlook. Despite nearing record prices, the housing market is showing no signs of cooling off, with demand for housing expected to remain strong. Rising demand and limited supply are contributing to competitive rental markets and higher yields. As construction costs ease and infrastructure spending gains momentum, the property market is expected to continue its upward trajectory in 2024, breaking records and setting the stage for a booming year.