As we head into 2024, predictions on what the New Year holds for the economy are coming in thick and fast.

Macquarie Bank are the latest to deliver their take on what the next 12 months are likely to bring, with their Economic & Market Outlook suggesting “below trend economic growth for Australia as weaker labour market conditions weigh on consumption growth.”

They go on to forecast that the RBA may start cutting interest rates from August 2024 as inflation cools significantly in the first half of the year.

That will be welcome news to millions of Australian homeowners, who have had to cope with a record FOURTEEN rate hikes since May 2022.

But what should we expect from the Australian housing market in 2024 as a result?

Demand outstrips supply

Despite the economic headwinds gathering, we don’t expect the real estate market to drop significantly in the coming 12 months for one simple reason – demand for housing still outstrips supply across the country.

Recent net migration figures have been high since Covid, and we haven’t been building the infrastructure required to cope with this over the last decade – particularly new homes.

While we are all at the mercy of inflation and the interest rate rises to counter this, the fundamentals in the market haven’t changed. There are more people wanting to buy houses in Australia than there is supply, so prices are unlikely to fall (at least generally).

It’s worth pointing out here that regional areas have been more volatile of late, experiencing big price rises during Covid. Now that people are having to return to offices in large numbers, these areas have fallen back to trend (and lower in some cases).

Investors are back

A big part of demand for housing in Australia comes for property investors, so it’s interesting that recent figures from the Australian Bureau of Statistics (ABS) show lending to these investors is rising significantly again.

The ABS’s latest report on lending activity for October indicates that new borrower loan commitments from investors was up 5% on the previous month, and 12.6% year on year.

This compares with lending to owner-owner occupiers rising only 1.4% over the same 12-month period.

The upshot? Investors are back in the property market, and they usually know a good thing when they see it.

Add in potential interest rate cuts for the second half of 2024 and it’s not easy to see why many are predicting another rise in house prices later in the year.

Good properties still selling fast

Although clearance rates in most major capital cities are still trending downwards according to a recent report from Domain , good properties are still selling quickly based on our anecdotal evidence (we are mortgage brokers after all!).

Those properties within an easy commute of CBD areas, with good transport links and access to schools, continue to outperform the markets our clients are buying in.

Even if that isn’t an apt description of your home or target area, that doesn’t mean it’s all bad news.

It’s always better to buy in a slightly depressed market if possible, as less competition at auction gives you more scope for negotiation on price.

You can check out the latest real estate price trends from Core Logic here to found out what’s happening in your local area.

Finally, it’s worth bearing in mind that the housing market is still driven by emotion to some extent, particularly in Australia where the ‘picket fence’ concept is still alive and well.

The FOMO (Fear of Missing Out) factor is an important element in the house buying public. We would hazard a guess that this may increase gradually during the course of 2024 as interest rates start to fall and people start feeling more confident they can make their mortgage repayments without sacrificing other things.

Whatever the New Year holds – and we certainly aren’t offering financial advice here by the way! – Australians will continue to buy property and invest in the suburbs they know and love.

Investors will continue to take advantage of the tax incentives that owning property offers them, and the world will keep spinning.

Of that you can be relatively sure (in the short term at least). Happy New Year!

Loanscope brokers have many years of experience handling home loan solutions for a wide range of clients, from first home buyers to experienced property investors – contact us for a confidential, obligation free discussion.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Emmanuel Guignard (MBA)
Director & Principal Mortgage Broker
With over 15 years’ experience in the finance industry and a recently completed MBA in Financial Planning, Emmanuel leads the broking team at Loanscope. His experience includes working with a wide range of property investors, from first time buyers to investors with large property portfolios. This includes handling complex applications involving trusts, company structures and self-managed super funds. He also operates as a qualified mentor to other mortgage brokers via the FBBA mentor program.
Emmanuel Guignard