Housing market forecast for 2024
Australia’s property market in 2023 defied expectations with property prices rising on the back of increasing interest rates. What unravelled was a glaring shortage of listings as buyer demand fuelled the market and sent prices rising, surprising even the most seasoned economists. As we reflect on the first quarter of 2024, it is clear that Sydney’s property market has started the year with impressive strength and resilience. Both buyers and investors are showing renewed confidence, driving sales figures and prices to new heights. Continuing with this momentum, and driven by steady population growth, increased buyer demand and a dire housing supply shortage, house prices are tipped to rise across the country by 5 to 7 per cent, with the median house price in Sydney expected to rise by 7 to 9 per cent this year.
Sutherland Shire Suburbs that could shine in 2024
According to research group PropTrack, the Sutherland Shire has dominated the top 10 list of ‘Suburbs to Watch’ in 2024 with Sylvania Waters, Kareela, Yowie Bay and Woronora all tipped to increase significantly in value this year. With enquiry levels skyrocketing, it is expected that these suburbs could outshine their neighbouring suburbs due to growing demand fuelled by droves of people moving from the Eastern Suburbs and Inner West seeking increased value for money.
Likelihood of interest rates declining in 2024
Interest rates have been a hot topic of discussion this year with economists and experts divided in their predictions. As the board of the Reserve Bank prepare to meet on 6 May 2024, it is widely speculated that the cash rate will remain unchanged. Following the latest inflation figures, the CBA was the last of the 4 major banks to revise its cash rate forecast, with all of the big 4 now predicting that Australia’s first interest rate cut since 2020 is unlikely to occur until November this year.
| May RBA meeting | Forecasted
next RBA move |
Total 0.25% – pt cuts in 2024 | Total 0.25% – pt cuts in 2025 | |
| CBA | Hold at 3.45% | 0.25% pts Nov 24 | 1 | 4 |
| Westpac | Hold at 3.45% | 0.25% pts Nov 24 | 1 | 4 |
| NAB | Hold at 3.45% | 0.25% pts Nov 24 | 1 | 4 |
| ANZ | Hold at 3.45% | 0.25% pts Nov 24 | 1 | 2 |
Population-driven housing demand
Population growth and continued post-COVID migration are set to remain a dominant feature in the housing market in 2024. Domain analysis has found that population growth has a long-term impact on property prices and will continue to drive prices into the year. New home completions have failed to keep pace with population growth resulting in a population-driven housing demand predicted to outstrip current housing supply. With the country’s population projected to increase by two million people by the end of this decade, the government has announced its aim to build 1.2 million new homes by 2029, however, experts still believe that this will likely still fall short of Australia’s housing needs.
Buyer Confidence
One of the most encouraging signs for the Sydney property market in 2024 is the high level of buyer confidence and activity. Despite the lingering effects of the pandemic and the uncertainty surrounding the global economy, buyers are showing a strong appetite for property, particularly in the face of anticipated interest rate cuts later in the year. Investors are recognising the current window of opportunity to enter the market before prices rise further. With rental yields remaining attractive and the prospect of capital gains on the horizon, savvy investors are snapping up properties across the city, while first home buyers are also making a comeback. This renewed activity at the entry level of the market is a positive sign for the overall health and sustainability of the Sydney property market.
Listings Constraints Drive Competition
While buyer demand is strong, the Sydney property market is facing a shortage of listings, particularly in the luxury and prestige segments. The lack of luxury inventory is especially acute, with prestige properties tightly held by their owners. This scarcity is driving up prices and fuelling intense competition among high-net-worth buyers who are willing to pay a premium for the right property.
Architect-Designed Homes in High Demand
One of the most interesting trends in the Sydney property market in 2024 is the growing demand for architect-designed homes. Buyers are willing to pay significant premiums for properties with high-end finishes, innovative designs, and luxurious features. Sustainability, wellness, and flexible living spaces are among the top priorities for prestige buyers, who are seeking homes that not only look stunning but also enhance their quality of life. With the scarcity of land for new luxury builds, existing architect-designed homes are becoming increasingly coveted and valuable.
