In Australia, we’re resilient when it comes to buying and selling residential property. Interest rate rises and cost-of-living increases barely had an impact. The main impact was a reduction in the number of people selling, which was (and is) due in part to switching costs. This is also quite typical of what we are seeing in the Inner West.
Australia-wide, property prices grew by 8.1%, with gains in most capital cities. The highest rises were in Sydney (11.1 per cent), Perth (15.2 per cent), and Brisbane (13.1 per cent), with Brisbane starting to feel the effects of winning the right to host the 2032 Olympic Games. Hobart and Darwin both saw modest falls. Hobart prices continued to decline over the year, while Darwin ended the year with gains of 3.7%.
Across regional markets, values rose 4.4%.
12 months of real estate in review
Encouragingly, despite pressures on cost, Australia-wide, dwelling values are 31.3% above where they were before the pandemic. Prices are still the highest they’ve been for decades in most cities and regions in Australia. According to CoreLogic figures for the week ending 11 February, auction clearance rates were up in all capital cities, with a weighted average clearance rate of 68.3%.
This time last year, we assumed Australians would move on from the slump in 2022 by the end of 2023. As it happened, we saw continual growth throughout the year.
Consumer sentiment
As of 23 February, the ANZ-Roy Morgan Consumer Confidence index was at 83.2 points, below the 1973-2024 average of 110.7. In general, buyers and sellers are optimistic; however, the war in Ukraine, the devastation in the Middle East, the US election in November, and the continued spectre of a recession combine to create uncertainty.
While the US economy is strong, Germany, Finland, the UK and Ireland are in technical recession (two consecutive quarters of negative growth), while France showed little growth over the second half of 2023.
The Australian economy has slowed almost to a stop. However, our population growth – primarily through immigration – has helped us narrowly avoid a technical recession. February saw a marked growth in property values, while current interest-rate stability is inspiring confidence in buyers and sellers alike.
HOMEOWNER UPDATE
The economy in 2024
Heading into 2024, we’re facing a sluggish economy, rising unemployment, lower exports and a drop in imported consumer goods as Australians reined in their shopping.
We know from experience that Australian mortgage holders will sacrifice much to retain their property so a slow-down in consumer spending was only to be expected.
Property auctions and clearance rates 2023
CoreLogic’s 2023 Auction Market Review released in February this year showed 96,177 homes went under the hammer across the combined capitals last year. This represented an -8.0% drop on 2022 and the lowest number of auctions annually in three years. However, the 2023 clearance rate was 64.9%, up from 61.2% in 2022.
For the week ending 4 February 2024, CoreLogic noted 1,671 auctions last week, the second-busiest start to the auction season on record with clearance rates of Sydney ‒ 70.6%; Melbourne ‒ 67.1%, Brisbane ‒ 67.2%, Adelaide ‒ 74.1% and Canberra ‒ 58.6%. Properties that went to auction in Perth and Tasmania (all) were passed in.
Property market movements in 2024
While spring is often noted as a peak selling season, figures bear out that autumn is the season that delivers the best sales results. So look for a bump in average sale prices from March onwards and a further bump in September/October as the weather warms up again and days grow longer.
PROPERTY INVESTOR UPDATE
Rental listings in 2024
According to Eliza Owen, Head of Research at CoreLogic, rent values rose steadily to July last year at which point values began to ease in capital cities. Slowing in regional centres has been evident since April last year. Note ‘slowing’; the market isn’t going backwards, just not rising exponentially as it had been doing.
Owen suggests that slowing growth will be a key housing market trend for 2024 and offers three reasons.
1. The cash rate is expected to fall, which could increase investment and first home buyer activity. Rents move with interest rates, and interest rates could be on the way down either this year or next. Rent values and interest rates tend to move in tandem.
2. Income growth is expected to slow, which might prompt a change in housing preferences.
3. Stretched rental affordability could see movements to more affordable areas.
However, although the three scenarios above might come into play, we need to factor in:
- Slower building activity.
- Increased population (although the Australian Bureau of Statistics figures show temporary higher education visa holders accounted for 33.9% of overseas migration in the 2022-2023 financial year).
- Properties off the long-term rental market again as landlords who took their properties off the short-term rental market over the pandemic years are now switching back. In some areas of high demand, this is up to 20% of housing stock.
- The release of Australian Bureau of Statistics (ABS) figures that give indications of a downturn for first home buyers in January 2024, as the number of owner-occupier first home buyer loans decreased by 6.9%.
- Forthcoming tax cuts that will put more money in renters’ pockets.
Can we help you with your property needs?
If you’d like advice about the property market, whether you want to sell, buy or lease, we know and understand the Inner West market. Please get in touch. We’re here to help.