Australia’s “rollercoaster” real estate market faces fresh peaks and troughs in 2024 as the prospect of falling interest rates contend with a recent slowdown in price increases.
Renters, meanwhile, are experiencing smaller increases in payments but the share of income going to rent remains at near-record levels with little relief in sight.
In 2023, data group CoreLogic’s home value index rose 8.1% nationally, more than reversing the 4.9% retreat in the previous year but far short of the 24.5% jump in 2021.
For December 2023 alone, the index’s advance eased to 0.4% and 1.5% for the quarter as a whole. That lifted the national median price for a home to almost $758,000.
Melbourne ended 2023 with price falls in the final two months, while Sydney prices edged just 0.2% higher in December alone. Perth, Adelaide and Brisbane each ended the year at record highs, according to CoreLogic.
The rebound of the market in 2023 defied many predictions, not least because the Reserve Bank kept lifting interest rates, actions that typically drag on property prices.
Adding impetus to demand, though, was the unexpected leap in net migration, with the tally reaching a record 510,000 in the 2022-23 fiscal year.
CoreLogic’s research director, Tim Lawless, said predicting 2024’s price trends won’t be straightforward either, even if the RBA’s next move is likely to be a rate reduction unless inflation figures are surprisingly strong for the December quarter.
“My best guess would be that rate hikes are probably done,” Lawless said. “We’ll probably start to see some growing speculation of rate cuts through the second half of the year.”
While a drop in borrowing rates would normally be expected to spur demand, a range of factors that took some of the heat out of the market in the second half of 2023 would probably extend into this year, Lawless said. These include