Property News, Insights & Education

    Property Market Predictions for 2024: Growth, Projections, and Forecasts

    • Most forecasters believe property prices will continue to increase this year
    • However, on balance, they believe national home values will increase at a slower pace than last year
    • Only one property forecaster - SQM, is predicting negative or very weak home price growth in 2024

    With all the major forecasters now having revealed their thoughts for the property market in 2024, a summary of their projections and predictions might be useful.

     

    One thing is clear - the overwhelming majority believe home values will continue to increase this year, but they are split on the pace of that growth.

     

    REA Group’s PropTrack:

     

    Proptrack_Jan-1-2023

     

    As you can see PropTrack is forecasting more growth in home prices in the booming markets of Perth (5 to 8%) and Adelaide (4 to 7%).

     

    Projections for Sydney (2 to 5%), Brisbane (3 to 6%), and Melbourne (1 to 4%) are more subdued, while only Canberra, Hobart and Darwin are given any prospect of going backwards.

     

    Their research team expects growth generally to be more subdued than this year, with “first-home buyers sidelined as affordability bites”, and tight rental markets buffering price falls. 

     

    PropTrack’s end-of-year report also points out that “from the middle of 2024, we’ll also see the commencement of Stage Three tax cuts, which are most beneficial for higher income earners.”

     

    “In turn, this could lead to increased demand for higher priced housing.”

     

    Australian Property Monitors’ Domain Group:

     

    Domain_Jan-1-2024

     

    Domain’s forecasts for 2024 are more detailed, splitting projections up into houses and units.

     

    Overall, their research team expects houses - particularly in the capital cities - to do better than units.

     

    There is no forecast for the small Darwin market, and it’s only the unit market in Hobart, which Domain believes has any possibility of going backwards in value in 2024.

     

    The outlook for houses in Sydney (7 to 9%), Adelaide (7 to 8%), Brisbane (7 to 8%), Perth (6 to 7%) and the Gold Coast (6 to 7%) are particularly bullish.

     

    Overall, Domain believes the upward price drivers of population, limited supply and a possible easing of the mortgage serviceability buffer (currently 3%), will outweigh the effects of downward drivers, which include affordability, rising unemployment and possible interest rate increases by the Reserve Bank if inflation doesn’t come down fast enough. 


    SQM Research:

     

    SQM is the clear outlier when it comes to predictions for 2024.

     

    Managing Director Louis Christopher’s “Base Case” is that there will be a small fall in house price values or very weak growth in the capital cities of between -1 to +3 per cent this year.

     

    That prediction is based on prices only going up in two cities; Perth (5% to 9%) and Brisbane (4% to 8%).

     

    “For much of the rest of Australia, the sharp deterioration of housing affordability, driven

    by ongoing interest rate rises which are now (in SQM’s opinion) at restrictive levels, plus an

    anticipated slower economy will see a modest to moderate correction in dwelling prices take place in Sydney (-4% to 0%), Melbourne (-3% to +1%), Canberra (-8% to -4%) and Hobart (-7% to -3%), Mr Christopher says.

     

    “Adelaide (0% to +3%) and Darwin (-3% to +1%) are anticipated to remain steady or record a minor rise/correction.”

     

    CoreLogic:

     

    CoreLogic hasn’t released any firm numbers in terms of where home values may go in 2024, but the real estate data analytics firm points to several trends.

     

    It believes prices will ease at the high end of the market saying, “the weakening in market conditions has so far (toward the end of 2023) had a greater impact on the more expensive segment of Australia’s housing market.”

     

    “However, it is not uncommon for downswings to eventually cascade down to the more affordable segments of the housing market at a lag.” 

     

    But it does say that “market conditions could once again strengthen towards the end of the year however, if there is a loosening in monetary policy.” 

     

    CoreLogic also predicts very little relief for tenants in 2024, saying “rental growth will continue to slow, but may not decline nationally”.

     

    Ray White Real Estate Group:

     

    Ray White’s large national footprint of local real estate franchises means they sell around 13% of properties in Australia.

     

    Their chief economist Nerida Conisbee points to a number of trends that will shape the market in 2024, key among them is that price growth will continue.

     

    She believes interest rates have peaked or are about to peak, but the bad news is that there’s unlikely to be a rate cut until late 2024 or early 2025. 

     

    “This means mortgage holders need to “survive until 2025”, paying far more on their home loans than they did two years ago”, she says.  

     

    She also predicts that rents will start to stabilise, but a continuing low supply of rental properties will see “tough times for renters to continue”.

     

    The big 4 banks:

     

    Big4_Jan_1_2023

     

    Many of the predictions you’ve read so far take into account the impact of interest rates on the property market.

     

    So what do the companies that write most housing loans - the “Big 4” banks think?

     

    The largest provider of home loans in Australia, the Commonwealth Bank, thinks the RBA’s cash rate has already peaked at the current 4.35%.  

     

    But it’s forecasting rates will stay quite high during 2024, before rate cuts start later in the year, with the cash rate eventually dropping to 2.85% by June 2025.

     

    However, CBA still believes home values will increase, predicting 5% growth across Australia in 2024, with Sydney house prices set to rise by 4%, and Melbourne’s by 5%. 

     

    Like the CBA, Westpac and ANZ also believe rates have peaked, but they are forecasting the cash rate won’t be cut quite as quickly.

     

    Westpac believes rates will drop to 2.85% by December 2025, while ANZ is tipping a cash rate of 3.35% by June 2025.

     

    Westpac is also forecasting a national house price rise of 4% in 2024, with a healthy 6% boost in Sydney and 3% in Melbourne, while ANZ is tipping national house prices will rise by 3 to 4%.

     

    NAB is the only major bank that is still expecting rates to go higher.

     

    It thinks the RBA will increase the cash rate to 4.6% at its February meeting and hold rates high for most of 2024, before finally bringing rates down to 3.10% by March 2026.

     

    Nevertheless, it’s still expecting a national house price rise of 5% per cent this year. 

    “I suspect another rate rise probably won’t affect house prices,” NAB’s Chief Economist Alan Oster has been quoted as saying.

     

    “If you can afford what you have now, 25 basis points [0.25 per cent] won’t kill you.”