Adelaide's property is expected to continue its strong growth momentum in 2024 as it has all the drivers for a solid investment market.
Growth momentum will also be matched in Perth and Brisbane, with the property market in the two cities seeing the strongest growth throughout 2023.
Strong job growth, affordable housing** and strong rental yields have supported these markets, attracting investors and homebuyers.
Keep in mind that Adelaide, Perth and Brisbane have something for everyone, with lower entry points for first-time buyers, strong rental demand and rental growth for investors, and excellent work and living facilities for families and retirees.
When considering these markets, don't be more than a 45-minute drive from the city and only look at established properties and don't look at off-plan properties.
Proximity to the business district is a key factor in the Adelaide, Brisbane and Perth markets, as people don't commute an hour to work like they would in Sydney and Melbourne.
Sydney real estate got off to a faltering start
Sydney's property market got off to a rough start in 2023 with a negative growth trend and weak sales** but picked up by the end of the year, with Sydney's property market growing by 11 in the last 12 months4%γ
The slowdown in interest rate hikes and the lack of housing stock have put the Sydney market back under pricing pressure and pushed house prices north again.
Due to the shortage of **chain and the lack of skilled **labor over the past few years, there is a shortage of new construction and residential **, and the housing shortage will continue until 2024 as the population grows and the demand for housing stock continues.
The lack of housing** will create growth at the front end in 2024, but it won't be enough to save the Sydney market at the back end of the year.
The Sydney market is expected to rise slightly in early 2024, but if interest rates continue to rise into 2024, mortgage stress will remain high, especially with Sydneysiders having the highest mortgages in the country.
If interest rates do rise, as suchAustraliaAs the central bank has hinted, this will have a much greater impact on the $2 million plus $2 million market than the below $2 million market, with less units and high-density developments being built due to soaring construction costs.
There will be some in the unit market, but the $2 million plus market will feel the impact of the upcoming rate hike.
Melbourne and Canberra real estate downturn
The trend in Melbourne is similar to that of Sydney, the second largest city, with Melbourne property up just 3 in the past year9%γIn the last quarter, home values fell by 09%γ
This upward trend is expected to improve slightly in 2024, but if interest rates continue to trend upwards in early 2024, the RBA will once again decide the fate of the Melbourne market.
However, rents in Melbourne's inner suburbs and ** business districts are soaring, which could be a harbinger of a turnaround in 2024.
Canberra's capital growth over the past year has been modest at just 12%γ
Canberra has just experienced a few years of unrivalled harvest growth, so this adjustment is to be expected and welcome, and is likely to continue into 2024.
This year, Canberra's house prices are likely to see a small**, or a high value point, followed by a stabilisation of the market.
Darwin, Hobart Investor Exclusion Zone
The markets that will be felt the most in 2023 are Hobart and Darwin, with the former seeing a 0% drop in home values4%, Darwin down 01%, it's no secret.
Both markets have been under pressure over the past few years due to a lack of diversified jobs and infrastructure spending, with Hobart in particular being supported by interstate investors who are now jumping ship to lower mortgage costs.
This will continue into 2024, with Hobart likely to suffer the most, with Darwin not far behind.
What should property investors look at?
For residential investors in 2024, Adelaide, Perth and Brisbane will be in the spotlight.
Investors should note that if interest rates continue to rise, it will put pressure on borrowing capacity as banks consider income versus the cost of borrowing.
Sophisticated investors should keep a close eye on the industrial real estate sector, which is set to generate some strong results as it has been affected by fundamentals for many years and has insufficient available stock.
The senior living industry is also booming due to an aging population, and this trend will continue into 2024, and for the same reason, medical assets.
While some retirees will put their hard-earned savings into a retirement village property, experts warn that buying a retirement unit is not just about buying another property, it needs to be considered extra carefully as it is widely seen as an investment in lifestyle rather than financial security.
Residential and commercial assets that should be avoided
The sector that is likely to weaken in 2024 is the childcare sector, as there may be an oversupply in some regions.
With the new Seven Star Energy Rating Framework coming into effect, older homes and units may be affected.
Investors should also avoid buying homes and land in 2024**, especially in the current lending environment.
Financing approvals are not reliable, and it can be a costly mistake if your circumstances change, or if the value of an off-plan property changes between the purchase of an off-plan property and the closing of the property.