Slight uptick in economic growth and house prices
Despite the expected fluctuations in the interest rates, the majority of property professionals expected 2024 to be positive with 57% expecting some economic growth. A good portion foresee a rise in house prices, with 46% expecting a modest increase of 1-5%, and an additional 13% anticipating a more substantial rise of over 5%. Meanwhile, 16% hold the belief that house prices will decline.
Survey results are relatively in line with where housing market performance currently forecast by the major banks. “The broad expectation for housing values in 2024 is that the market will still grow, but at a slower rate than the 8.1% observed in 2023*. Growth in housing demand is expected to slow amid higher cost of living pressures, a higher tax take from bracket creep, and high interest rates,” says Eliza Owen, Head of Australian Research at CoreLogic. “This means less savings to put toward housing purchases - indeed the latest national accounts data from the ABS showed the household savings ratio had fallen to its lowest level since 2007. Consumer sentiment remained very low at the start of 2024, which can also signal households being hesitant to make high-cost, high-commitment decisions.
Despite some of the headwinds for market demand, growth is still expected to be positive throughout 2024. Ongoing constraints in the construction sector are likely to keep a floor under home values, with the number of completions trending lower throughout 2023.”
Eliza Owen continues, “There remains a strong mismatch in the supply and demand of dwellings across Australia, and anything that makes buying more accessible, such as a reduction in interest rates, would likely boost buyer numbers. With inflation currently trending just below RBA forecasts, the case for a cash rate reduction is firming up in 2024.”