Peek into the future: 5 factors set to transform the property market in 2024
05 December 2023
Navigating through a challenging year grappling with rising interest rates, surging house prices, supply shortages and heightened demand, the property market has drawn the focused attention of brokers and owners.
Domain’s 2024 outlook report reveals significant shifts in Australia’s housing landscape, covering affordability, interest rates, urban development, population growth and rental markets.
Here are five key predictions for the property market that Domain believes will reshape it in the coming year.
1. Interest rate relief fuelling demand
Following eighteen months marked by heightened mortgage stress due to thirteen rate hikes from the Reserve Bank of Australia, Domain envisions potential relief in stretched affordability and increased borrowing power in early 2024.
The Melbourne Cup Day interest rate hike raised the cash rate to 4.35%, up from a stable 4.10% over four months to address persistent inflation. The Australian Prudential Regulation Authority sets the buffer at three percentage points to ensure homeowners can handle mortgage repayments in case of rising interest rates.
Easing the buffer could result in a surge in both demand and prices later in the year.
2. Affordability matters
Domain highlights a growing focus on affordability among Australian homebuyers, with a trend expected to strengthen in 2024.
Prospective buyers are poised to explore overlooked areas and bridesmaid suburbs, notably in Sydney, where preferences are shifting towards units over houses.
The 2024 federal government’s Help to Help to Buy scheme, supporting 40,000 Australians with a minimal 2% deposit, is set to increase the availability of affordable units in major cities.
Domain also anticipates a rise in generational inheritance as Baby Boomers contribute to their descendants’ property purchases. Domain predicts that “policies aimed at making the home ownership dream a reality will exacerbate the stress on housing supply as more buyers compete for the same number of properties.
3. Urban sprawl and diversification
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4. Population growth driving housing demand
Recognising the influence of strong population growth driven by international migration, Domain suggests that net migration may have peaked. Despite a potential return to normal patterns by 2025, lasting effects on the housing market are expected in 2024 and beyond.
The combination of a challenging rental market and the increasing appeal of property ownership may prompt more people to consider buying a home.
Domain revealed that, “together with a perilous rental market, it makes purchasing more attractive and may shift some to buy, given the current challenges of securing a lease.
5. A shift from tenants to homeowners
While renting homes for longer becomes common in Australia, Domain predicts a slowing growth trend in rental prices at some point in 2024, continuing this trend.
This shift could result from increased house-sharing practices and better incentives for first-time buyers, transitioning them from tenants to homeowners.
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