Property prices could rise 4 per cent next year

The rebound in the property market is expected to continue in 2024, with values to rise by up to 4 per cent, according to a new report.

PropTrack’s Property Market Outlook Report December 2023, predicts that national home prices will increase between 1 per cent and 4 per cent on the back of tight supply and surging demand.

The report found that Perth (5 per cent to 8 per cent), Adelaide (4 per cent to 7 per cent), and Brisbane (3 per cent to 6 per cent) are likely to lead home price growth across the country, after consistently recording strong gains in 2023.

While prices in Sydney (2 per cent to 5 per cent), and Melbourne (1 per cent to 4 per cent) are set to rise, though at a slower pace than they have over the past 12 months.

However, it’s not all good news for homeowners, with the smaller capital cities potentially seeing declines or only moderate gains over the year, including Canberra (-1 per cent to 2 per cent), Hobart (-2 per cent to 1 per cent), and Darwin (-3 per cent to 0 per cent).

PropTrack Director of Economic Research and report author, Cameron Kusher, said Australia’s property market proved resilient in 2023. 

“Home prices have increased 5.5 per cent so far this year to a record high, despite deteriorating housing affordability and interest rate rises significantly reducing borrowing capacities,” Mr Kusher said.

“Nationally, we expect prices to grow between 1 per cent and 4 per cent in 2024.”

Mr Kusher said he expects a combination of continued strong demand and limited new housing construction will contribute to price gains, albeit at a slower pace than what we experienced this year.

“Stage three tax cuts will commence in July, which will benefit higher income earners, and in turn, could lead to increased demand for higher priced housing,” he said.

“Interest rates are now at a 12-year high, and while they remained steady in December, there is a possibility of future increases, which could have an impact on buyer and seller sentiment.” 

Source: PropTrack

According to the report, national home prices rose 5.5 per cent over the course of the year to sit at a record-high level.

Capital cities drove home price growth in 2023, rising 6.6 per cent over the same period, compared to a 2.8 per cent increase in regional areas.

Nationally, the total stock of properties for sale is historically low, sitting 23.9 per cent below its November decade average.

Mr Kusher said buyers have been competing for a relatively low volume of stock and as a result, the number of enquiries per listing on increased 20.5 per cent year-on-year.

He said reflecting on 2023, a number of factors drove the home price rebound. 

“The strength and pace of Australia’s market rebound despite surging interest rates surprised many this year,” he said. 

“The volume of stock available for sale remained at persistently low levels while buyer demand also increased significantly, fuelled by a housing shortage and strong population growth.

“It’s likely these trends will continue into 2024.”

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.