Welcome to the Treak Real Estate Property Update, our regular round-up of news from the Sydney and national property markets.
As we step into the promising year of 2024, the Australian housing market remains a beacon of resilience and optimism, defying expectations and charting new heights. Join us as we delve into the latest property price forecasts for the year, unveiling the trends that await us in the dynamic realm of real estate.
Australia's Housing Market: A Remarkable Resilience
Despite facing 13 interest rate increases from the Reserve Bank of Australia over the last 18 months, with official rates rising by 4.25%, the property market has not only weathered the storm but has displayed remarkable strength. Contrary to projections, our property markets bottomed out in early 2023, and prices have been on the up ever since.
Recent research from CoreLogic highlights this resilience, with Sydney dwelling values witnessing a notable rise of 0.2% in December alone. Over the October - December quarter, dwelling values increased by 0.8%, and over the past year, they surged by an impressive 11.1%. Sydney dwelling values currently stand at -2.1% below the record high set in January 2022.
Forecasts by the big four banks for 2024
Let's take a closer look at what the big four banks are forecasting for property prices in 2024:
ANZ: Capital city property prices are expected to lift by 6%, with Sydney rising between 6-7%.
CBA: Anticipates a 5% increase in capital city prices, with a 4% increase in Sydney
NAB: Predicts an average rise of 5.4% across the capitals, with Sydney at 5%.
Westpac: Foresees a 6% growth across the combined capitals, with Sydney at 6%.
Driving Forces: Migration, Supply, and Inflation
High migration levels, coupled with low housing stock, continue to exert pressure on house prices. While strong population growth in 2023 has been observed, the shortage of new dwellings is evident in low rental vacancy rates and higher house prices.
The positive correlation between house prices and migration underscores the need for state and local governments to enhance planning and land-use rules to address the growing demand.
As inflation peaks and interest rates likely stabilise, consumer confidence is expected to return, propelling the markets further upward. However, the market's trajectory will be fragmented, presenting diverse opportunities for both buyers and sellers.
Sydney's Revival: A Testament to Market Resilience
Sydney, having experienced a surge in housing values by 27.2% in 2020 and 2021, followed by a 12.4% dip from peak to trough in January 2022 to January 2023, is now on a consistent upward path. Housing prices have risen by 11.6% since January 2023, signalling a clear turnaround.
Sales Trends and Rental Dynamics
CoreLogic's research revealed there were 488,898 sales in 2023, representing a marginal decrease of -2.8% compared to 2022. Notably, Sydney stood out with a 3.3% increase in sales volumes.
The study also delved into the average days on the market in Sydney, revealing a reduction from 36 days in 2022 to just 32 days in 2023.
Shifting our focus to rental dynamics, December witnessed a 0.6% increase in rental values across Australia, contributing to an impressive national annual growth of 8.3%. In the bustling city of Sydney, rents surged by 10.2% over the last 12 months, boasting an average gross rental yield of 3%.
Looking Ahead: The Rental Landscape
As we look into the future, there seems to be no end in sight for the rental crisis. Rent values are projected to continue skyrocketing throughout the year, posing both challenges and opportunities for tenants and landlords alike.
In conclusion, the Australian property market is poised for an eventful year, with growth, resilience, and opportunities woven into its fabric. Stay tuned as we navigate this exciting journey together, unlocking the potential that lies within the ever-evolving real estate landscape.
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