According to a poll, real estate experts continue to project a 5.0% increase in Australian home values in 2024, ignoring remarks made by the central bank three months ago that might potentially lead to a rise in interest rates before the year is out.
Average home values fell 9% from their highest point during the pandemic, but they recovered nearly all of that last year despite the Reserve Bank of Australia raising the cash rate to a record 12-year high of 4.35%. It is generally expected that the bank would hold there into this year's second half.
For most first-time buyers, the typical cost of a home is too high. Prices will likely go up in the future due to a low unemployment rate, strong wage growth, and an increase in immigration, although less than in previous years.
The cost of a home has almost doubled since the financial crisis of 2008.
The median prediction of 14 real estate experts surveyed from February 16–28 indicated that average home prices would likely increase by 5.0% this year; this prediction remained constant from a poll conducted in December. Prices are expected to rise 5.0% in 2025, as opposed to 3.9% in the prior poll.
Australia's property market appears to be slowing down. 2023 was a really good year, with 9.1% rises in prices in major cities, but it is not expected to happen again. Adelaide Timbrell, ANZ senior economist, stated that the interest rate's persistence at 4.35% for the majority of the year will limit the growth of home prices in 2024.
Housing costs will still rise since tax and interest rate cuts will provide consumers with greater borrowing power throughout the year. There is also a backlog of unfinished housing projects and continued rapid population expansion.
A tax amendment that takes effect on July 1st will result in more taxes for high-income households and lower taxes for low-income households that are struggling with increased living expenses.
Due to the pandemic's rock-bottom loan rates and lack of available property, already high housing costs were pushed higher, forcing prospective first-time homebuyers to turn to the rental market.
Six out of ten analysts predicted a worsening of affordability for first-time homeowners in the upcoming year. The remaining four predicted an improvement in affordability.
According to senior economist Johnathan McMenamin of Barrenjoey, due to historically low levels of household affordability, housing is growing into a luxury product. Homeownership rates will decline as a result. Before the pandemic, people still had to make more money than the median in order to buy a home. However, it has since moved higher up the income distribution. The current cycle has resulted in a reduction in the pool of potential buyers, which is expected to lead to an increase in the pool of rentals.
Out of the eight respondents, three expected an increase, and five projected that the percentage of home owners to renters would rise in the upcoming year.
The proportion of analysts projecting a two-to-one increase in the gap between supply and demand for affordable houses over the next two to three years was significantly higher than that of those projecting a small narrowing or stability.
Timbrell of ANZ added that the proportion of affordable homes decreases every time housing costs rise faster than earnings and salaries. And it will continue until there is a significant rise in social housing.