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Continued Growth Forces Renewed 2024 Property Predictions

Continued Growth Forces Renewed 2024 Property Predictions

Despite the almost now traditional Melbourne Cup Day rate rise, Australia’s housing market continues to defy expectations.

Though there have been 13 interest rate increases from the Reserve Bank of Australia, which have seen official rates rise by 4.25 per cent over the last 18 months, property prices have now been on the rise since early 2023.

With the pipeline of new listings now diminishing as the year ends at a time when many buyers are keen to complete their transaction before the holiday break, experts believe it’s not likely that the latest interest rate rise will stall the market.

Even though most experts predicted a difficult time for Australia’s property market, it seems they have had to change their minds as we move into 2024 with more growth predicted.

According to figures, the underlying reason for this property price growth is that the demand to buy homes is still exceeding supply.

It’s much the same for the rental market where the supply/demand equation is so far out of balance that we’ve experienced an unprecedented rental crisis with historically low vacancy rates and skyrocketing rents.

On the auction front, with 3,019 auctions held last week the combined capitals hosted the second busiest auction week of the year to date.

Exceeding the 3,000 mark for only the second time this year, volumes were up 13.7% compared to the week prior (2,656) and 31.4% higher than this time last year (2,298).

Overall, Australian capital dwelling prices increased by 0.7% over the last month and are now 8.0% higher than they were 12 months ago.

It seems Australia is in the early stages of a new property cycle driven by an undersupply of good properties relative to increasing demand.

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Of course, these are “overall” figures – there is not one Sydney or Melbourne or Brisbane property market.

And various segments of each market are performing differently.

Declines last year were led by the top end housing markets, as have recent increases, particularly in Sydney, but now median price properties are increasing in value strongly.

But what are the reasons behind the increases? The short answer is there are several.

Property Asking Prices

The value of property asking prices is often a leading indicator for housing market sentiment.

In fact it’s more valuable than median prices which can be quite misleading, according to most in the know.

Early Market Sentiment Indicator

Asking prices often reflect the current sentiment of sellers in the real estate market.

If sellers are confident, they might set higher asking prices, anticipating strong demand.

Conversely, if sellers are uncertain or perceive a market downturn, they might lower their asking prices to attract buyers.

This makes asking prices a real-time indicator of market sentiment, often preceding changes in actual sales prices.

Predictive of Future Price Trends

Trends in asking prices can be predictive of where the actual property prices are headed.

For example, a consistent rise in asking prices over a period can signal an upcoming rise in transaction prices.

Impact of Economic Factors

Economic factors such as interest rates, employment rates, and broader economic health influence asking prices.

For instance, changes in the Reserve Bank of Australia’s policies or shifts in the job market can quickly reflect in the asking prices, providing insights into how these factors are influencing the housing market.

Regional Variations

In a diverse market like Australia’s, asking prices can also provide insights into regional disparities.

For instance, the property markets in Melbourne and Sydney might behave differently from those in Brisbane or Perth. Asking prices can give early indications of these regional trends.

Influence of Supply and Demand

Asking prices are also a response to the balance of supply and demand in the market.

In areas with limited supply and high demand, asking prices tend to be higher and vice versa.

It’s important to note that while asking prices are a valuable indicator, they should not be used in isolation.

Other factors like actual sales prices, time on market, auction clearance rates, and economic conditions also play crucial roles in understanding the property market dynamics.

Like to know what your property might be worth in the current market? Elders real estate have agents based all over Australia that would be only too happy to help. Contact one in your area here.