What is the outlook for Australia's property market in 2024?
According to Domain's 2023 Year-End Summary and 2024 Outlook report, homes and apartments** are expected to continue to grow.
Dr., Chief Research & Economist at DomainNicola Powell said
Some buyers, sellers and renters are proactively adapting to the ongoing impact of market developments in 2023 and the changes that may arise in the coming year. ”
Detached Houses & Apartments 2024***
Domain's report also highlights the housing market trends we can expect next year.
Outlook for five major trends in the real estate market in 2024.
1. Interest rate cuts will stimulate demand.
According to Domain's analysis, a cap has been set on buyers' ability to pay for home purchases due to declining housing affordability and people's reduced ability to borrow.
Dr., Chief Research & Economist, DomainNicola Powell said
In 2024, we may see some moves in favor of buyers. A rate cut or other stimulus will spark demand, triggering another *** scenario that could occur in the second half of 2024.
Another possibility is to ease the buffer zone for mortgage repayment.
This will undoubtedly allow many people to enter the housing market faster by increasing borrowing capacity or reducing the cost of debt holding, increasing demand and quickly putting upward pressure on housing**. ”
2. Transfer of affordability.
As more and more people seek affordable housing, urban sprawl and urban upgrading will intensify.
Buyers will explore alternative urban areas and neglected areas.
The federal** "Help to Buy" program – a relatively high 40% share of the homeownership scheme – will ignite first-time home buyers.
The four-year plan could begin in 2024.
The measure will be limited to residents of states that have legislated in support of the plan – all states that are expected to agree and pass legislation will be available early next year.
This will support the affordability needs of large capital cities, especially apartments. We'll also see a massive increase in intergenerational inheritance as baby boomers consider passing on their legacy early (and perhaps even skipping a generation to help their grandchildren), which will impact people's purchasing power and choices.
Policies to help people achieve their dream of buying a home will exacerbate the pressure on housing** as more buyers compete for a number of properties available.
3. "Yimbys support in my backyard" will replace "nimbys don't in my backyard".
According to Domain's report, 2024 will be the year of nationwide housing and planning reforms, with people who don't want to grow in their own backyards turn to support doing so.
dr.Powell commented:
We are about to witness a revolutionary approach to housing development and affordability, a forward-thinking approach that will promote urban densification in popular areas.
This could mean adjusting planning authority from local** to higher levels to avoid the interference of decision-making from a reluctance to develop in one's own backyard. Such a shift will lead us to shaping the cities of the future and finding new ways to respond to demographic change, rather than just planning for yesterday and today's Australia.
It can be expected that the federal effort to address housing affordability and promote first-time buyers into the housing market will spur a lot of building and transactional activity. "
4. Population growth drives housing demand.
Strong population growth will continue to be a feature of the housing market.
dr.Powell further commented:
We believe net overseas migration growth has peaked and is expected to return to normal in 2025.
The recent increase in immigration will continue to have a profound impact on our housing market.
According to Domain's analysis, the long-term cumulative effect of population growth on home prices means that it will continue to be the main driver of the housing market in 2024 and beyond.
In addition, since the rental market is currently in a state of crisis, buying a home has become more attractive. This situation may also prompt some people to consider buying a home, especially if they are facing the challenges that come with their current lease contract. "
5. The tension of the rental market has reached a balance point.
Australia's rental market is playing an increasingly important role in the housing market – more and more people are choosing to rent and stay longer for longer periods of time.
This trend is expected to continue in 2024.
However, this trend will eventually reach a tipping point where rental growth will slow and the rental market will become more balanced in some sub-regions.
This change will be determined by the limits of rental affordability.
More and more tenants are choosing to share a house, and incentives for first-time buyers will help some people achieve homeownership or accelerate their purchase of more affordable properties.
With mortgage pressure on the rise, landlords who prematured** in early 2024 will benefit buyers with more money.