Property Predictions for 2024.
Are we about to fall off the mortgage cliff in 2024?
With the largest interest rate rises in a generation from 2% to over 6%, the media have been sprucing about an impending mortgage cliff for some time. People have been waiting for the bubble to burst and to buy a bargain, again, for quite some time now! However, the reality thus far is that people simply have tightened their belts and held onto their properties. We have personally not heard or seen any talk of people not being able to afford their mortgages coming off their fixed rates. Sure, this may happen in some cases, and if and when it does, it is likely to be area-specific. Those areas where mortgages are higher are likely to be the spots where we may see some sales come onto the market where people are looking to downsize their mortgages to a more manageable level. Time will tell with this one, but we think if you are holding out for a bargain you may be out of luck.
One would assume that, with interest rate rises and the cost of living – from petrol and groceries to childcare – rising, house prices might fall and stay lower for a while. That is what the experts thought would happen in 2023.
Gareth Aird, head of Australian economics at CBA, says the 2023 prices “surprised almost every analyst, including the Reserve Bank”.
Should more stock come to market, it will help subdue price growth, but price rises are still expected to continue into 2024, Aird says.
“If the Reserve Bank cuts rates at some stage, that’s going to provide a massive tailwind on home prices at a time when they’re already elevated relative to income,” he says.
Domain chief of research and economics, Nicola Powell, echoes Aird’s comments but says the rate of growth will soften.
“What we saw in 2023 was unusual,” she says. “It was a real bounce-back because we’d seen such a strong pullback from sellers, but sellers are now coming to the market and I think that will ease the pace of price growth.
How the market opens in the first quarter of 2024 will be telling, in our opinion. More and more buyers are being priced out of the market, so how that pans out will be interesting. Whilst we had figured that the RBA had finished its rate rise cycle, the last rise in November had us all second-guessing things. There may be more rate rises to come if inflation proves to be the problem but surely the bulk of tightening is done.
The next move, at some stage, will be interest-rate cuts, and typically that gives support to the housing market – but also drives so much of price gains.
The first home buyer market ($500-$800,000) has been on fire over 2023, with homes in these price brackets in particularly high demand. We expect this to continue throughout 2024 with demand further increasing prices in this bracket. Logan is being touted as a hot spot, with lots of first-home buyers getting into the market along with investors, so good capital growth is likely to follow at least in the more entry-level price brackets.
Taulaga, J. (2023). How has Australia’s property market bounced back while interest rates and the cost of living are so high. Domain. https://www.domain.com.au/news/how-has-australias-property-market-reached-near-record-prices-in-this-economy-1244379/
Slaven, D. (2020). Queensland’s best-kept secret: Logan City real estate trend report. Open Agent. https://www.openagent.com.au/news/logan-city-real-estate-trend-report