In this edition, we delve into the complex and ever-evolving landscape of the Australian property market as we transition into 2024. With a compilation of insights from industry experts and analysts, we explore the contrasting predictions and trends shaping our real estate environment. From the optimistic forecasts of growth and hotspots to cautious projections of market corrections, and the pressing issues of the rental crisis, this newsletter aims to provide you with a comprehensive understanding of what lies ahead in the property sector. Whether you’re an investor, homeowner, or renter, these analyses offer valuable perspectives to navigate the year ahead in the dynamic world of Australian real estate.

The Hottest Affordable Suburbs from the Hot 100 Predictions for 2024

In a recent analysis by realestate.com.au, a panel of industry experts, including heads of major agency groups, buyer’s agents, researchers, investors, and in-house economists, identified the suburbs to watch in the coming year. These suburbs were chosen based on their affordability, location, family appeal, and upcoming investment and infrastructure projects.

Below is a summary of the most affordable metropolitan suburbs from the Hot 100 list, categorized by city –

In a recent analysis by realestate.com.au, a panel of industry experts, including heads of major agency groups, buyer’s agents, researchers, investors, and in-house economists, identified the suburbs to watch in the coming year. These suburbs were chosen based on their affordability, location, family appeal, and upcoming investment and infrastructure projects.

The below table sets out the top three most affordable suburbs for each state:

(Source: realestate.com.au)

Australian Property Investor Magazine Announces Top Hotspots for Property Upsizers in 2024

According to a recent report by Australian Property Investor Magazine, there’s been a significant resurgence in Australia’s property market. ALI recently highlighted the top hotspots for property upsizers in 2024, based on research that focuses on sales trends, market recovery, and the appeal for both investors and upsizers.

Key Insights:

• The market is experiencing a resurgence, with seven out of ten property markets in Australia showing positive sales activity.

Sydney, Melbourne, and Brisbane are leading this surge, with a notable increase in positive sales trends.

Apartments, particularly in inner-city areas, are gaining popularity among buyers.

Top 10 Hotspots for Property Upsizers:

Source: Property Credit via Australian Property Investor Magazine

This list, scored out of 100, is based on a combination of investment potential and lifestyle factors. These suburbs represent the ideal destinations for upsizers looking for more space and better living conditions in the coming year.

Australian Property Investor Magazine Announces Top Hotspots for Property Upsizers in 2024

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John McGrath’s Market Wrap on 2023 and Predictions for 2024

In a recent article for the Herald Sun, real estate expert John McGrath provided insights into the Australian property market’s performance in 2023 and predictions for 2024.

Key Takeaways from FY23:

• The market correction in FY23 was brief but significant, with a rapid return to growth in home values.
• The East Coast, led by Sydney, saw a shortage of stock for sale, sparking the beginning of a new market cycle.
• Pandemic impact led to substantial home value increases, especially in Queensland and Brisbane due to interstate migration.
• Rising interest rates since May 2022 ended the pandemic boom, causing a typical market correction of around 10%.

Median House Price Changes in FY23:

• Sydney: -5.7%
• Regional NSW: -10.2%
• Melbourne: -6.7%
• Regional Victoria: -8.9%
• Brisbane: -9.9%
• Regional Queensland: -5.2%
• Canberra: -10%
• Hobart: -12.7%
• Regional Tasmania: -7%

Major Market Trends:

• Early 2023 saw a shortage of homes for sale, pushing prices up amid strong buyer demand.
• Returning migrants and very strong employment are fuelling the market’s strength.
• The prestige sector is leading the recovery, with less impact from rate rises and increased demand from foreign investors.

Predictions for FY24:

• Continued market rebound in Sydney, Melbourne, Brisbane, Hobart, and Canberra.
• Regional markets are also turning, with ongoing interstate migration.
• A ripple effect in property markets as buyers seek better value in tree-change areas near big coastal towns.
• Queensland is leading the regional market recovery.
• Migration will be a key growth driver, with more skilled migrants filling labor market gaps.

(Source: John McGrath for Herald Sun)

A Different Perspective: Predicted Price Fall in 2024

Not all analysts are optimistic about the property market in 2024. According to a report of SQM Research’s analyst Louis Christopher, the Australian real estate market may face a downturn due to rising interest rates and increased property listings.

Key Points from the Report:

• Forecast by SQM Research: Louis Christopher, predicts flat to falling home prices in 2024 for most cities except Perth and Brisbane.
• Factors Influencing the Market: High interest rates, potential rise in unemployment, and an increase in distressed sales are contributing factors.
• Data from PropTrack: There was a significant jump in for-sale listings in October, higher than the previous year in most cities and regions.

Market Predictions:

• Base Case Scenario: Average city prices are expected to range between -1 to +3 percent in 2024, with potential gains mainly in Perth and Brisbane.
• Downbeat Scenario: If economic conditions worsen (energy crisis, higher inflation, interest rates above 5%, unemployment above 6%), national property prices could fall by up to 3%, with more significant drops in Canberra, Hobart, Melbourne, and Sydney.

Rental Market Outlook:

• Rents are forecasted to rise by 7-10% next year, with an even stronger increase in Perth.

Property Listings:

• There was a notable increase in new for-sale listings in October, with significant year-over-year rises in Sydney, Melbourne, and Canberra.

Regional Market Trends:

• Despite the overall trends, regional markets are still seeing an increase in homes available for sale, although the number remains below pre-pandemic levels.

This analysis offers a more cautious outlook for the Australian property market in 2024, highlighting the potential impact of economic factors and interest rates.

(Source: Michael Janda for Herald Sun)

Ongoing Australian Rental Crisis Projected to Continue into 2024

According to Leith van Onselen, Chief Economist at MB Fund and MB Super, Australia is facing a sustained rental crisis, which is expected to persist into 2024. This prediction is based on recent population and housing data.

Key Insights:

• Population Growth: Australia’s population increased by a record 624,000 in 2022-23, primarily due to net overseas migration of 518,000.

• Rental Market Pressure: This population surge is intensifying the existing rental market crisis. Australia’s rental vacancy rate is at a record low of 1.0% across the combined capital cities.

• Rising Rents: Advertised rents have soared by around 30% over the past three years.

• Dwelling Construction vs. Demand: There’s a stark contrast between booming population growth and the sharp decline in dwelling construction.

• Forecast for Net Overseas Migration: Net overseas migration is expected to moderate to 375,000 next year and 250,000 the year after. However, this is still considered high historically.

Falling Dwelling Approvals: Only 164,200 homes were approved for construction in the year to October – the lowest level in a decade.

Impact on Housing Shortages: With housing construction rates likely to fall, Australia’s housing shortages are expected to worsen. The mass immigration policy of the Albanese government is exacerbating this issue, potentially driving rents higher and increasing the number of Australians living in group housing or becoming homeless.

This analysis paints a grim picture of the Australian housing market, particularly for renters, as the country grapples with what he terms a “perma rental crisis.”

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