What is The Australian Property Market Forecast For 2024?

Let’s take a look at our Australian property market forecast and outlook for 2024. Surprising many property analysts, property prices bounced back in 2023 despite interest rate and cost-of-living rises, regaining all the losses of 2022. Annual property growth Australia-wide was just above 8%, close to the long-term average. In other words, it was ‘business as usual’.

Specific micro-economies and regions explain the non-uniform rise across all real estate markets.

Over the last 40 years, we’ve seen relatively consistent performance of stand-alone house prices in capital cities. Any differences tend to be due to economic factors. Perth and Darwin feel the effects of their distance from major East Coast populations and the significance of the mining industry.

In 2024, stabilizing interest rates and forthcoming tax cuts are fueling rising consumer confidence. However, we believe cost-of-living pressures and mortgage switching costs will force many prospective sellers to hold on to their properties.

We have rounded up views from Australian property economists for their real estate market predictions for 2024 and 2025.

Australian Property Market Forecast 2024

We recommend looking to property experts and the Big Four banks for guidance on house prices.

Bank property price predictions

Interestingly, all four major banks have similar property price predictions. (If you’ve read their predictions for previous years, you’ll understand this is unusual.)

Property expert, Michael Yardney, has gathered the predictions from Australia’s four largest retail banks:

ANZ forecasts capital city property prices to lift 5-6% in 2024. Due to the successful 2032 Olympics bid, Brisbane is expected to gain 9-10%. Sydney prices should increase by 4-5% and Perth is the outlier with a range of 1-11%.

CBA tips a 5% growth in capital cities, with Brisbane at 6% and Sydney at just 4%.

NAB has picked 5.4% as their figure for capital cities. Expectations set Brisbane at 6.5%, Perth and Adelaide at 6.2%, Melbourne at 5.5%, and Sydney at 5%.

Westpac forecasts a 6% growth for all capital cities in 2024, showing the most confidence. Perth is likely to lead with a 10% gain, followed by Brisbane at 8%, Sydney at 6%, Adelaide at 4%, and Melbourne at 3%.

What economists are predicting for 2024

Despite rising interest rates and cost of living pressures, almost all property markets showed consistent growth. But what do the experts say?

Shane Oliver, AMP

Shane Oliver predicts a 3-5% drop in home values in early 2024, followed by a rise after interest rate cuts later in the year.

Oliver expects an increase in distressed sales as homeowners exhaust savings or the ‘bank of mum and dad’, believing mortgage rates haven’t fully adjusted to interest rate rises.

Reserve Bank of Australia Australian Property Market Forecast 2024

The bank’s forecasts indicate that CPI inflation will fall from its peak of 7.8% in the last quarter of 2022) to 2.9% by late 2025. However, achieving this impressive goal could have detrimental consequences for employment, with unemployment tending to rise in line with inflation drops.

The housing market is forecast to cool. However, the limited supply should mean positive growth in housing prices in 2024.

SQM Research

SQM Research’s Louis Christopher is one of the more reliable predictors of house price changes. As of November 2023, Christopher’s research indicated capital city house prices could fall by up to 4% in 2024. His predictions are based on a scenario that includes a cash rate that ranges between 4.1% and 5.0%, population growth slowing to under 460,000 and unemployment rising to between 4.5% to 5.5%.

SQM Research predicts an increase in distressed sales, especially in NSW. The spectre of an energy crisis due to events in the Middle East could push the inflation rate back to the earlier peak of above 7% with the flow-on effects of rising unemployment and more interest rate rises.

Oxford Economics

While many welcomed 2023’s recouping of home price losses of the year before, the analysts at Oxford Economics take a conservative view and predict a softer year for home price growth in 2024.

Although Australia’s median home price hit an estimated new record of $939,000 in December 2023, external factors such as events in the Middle East that could lead to another energy crisis, war in Ukraine, the slowdown in building activity in China and a stalled Australian economy (that in 2023 was masked by population growth) could all lead to lower price growth.

From 2023’s figure of 8.1%, Australians should be prepared for growth of 2.7% in 2024, bumping up to 6.3% in 2025. Auction clearance rates, an indicator of the health of the property market, dropped towards the end of 2023. (However, 2024 so far has proven to be a busy year for auctions with relatively high clearance rates still.)

CoreLogic Australian Property Market Forecast 2024

The results of a recent survey canvassing over 1,400 real estate professionals reveal that the majority of respondents maintain a positive sentiment for the Australian economy in 2024. Of these, 57% expect some economic growth, while 59% believe home values will rise this year.

However, notes Eliza Owen, Head of Research, the market will grow at a slower pace than the 8.1% of 2023.

Opportunities in the current market

Relatively stable prices and interest rates offer great opportunities for investors and sellers alike. Sellers downsizing or moving to similar markets won’t lose when selling and buying.

Investors who are fully aware of their cash position, equity and tax stance can take advantage of stable/slowly rising prices to expand their portfolios.

Given the disparity between the banks’ and the property experts’ value predictions, we believe this is a year to hunker down, get the property basics right and set yourself up to thrive in 2025.

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