Property values have continued to rise in the first quarter of 2024, with strong growth reported across all major capital cities. Despite a pessimistic outlook by the Reserve Bank of Australia (RBA), the value of residential real estate increased to an estimated $10.4 trillion at the end of February (a new record high), while combined capital values are up 10.2% over last year’s figures. With the possibility of interest rate cuts looming, the market is gearing up for a strong year ahead.
Property Values Rising
Australia’s property market has once again demonstrated its resilience, defying the double-digit decreases predicted by the RBA and banks. Across Australian capital cities, dwelling values rose by 0.5% in March 2024 alone, marking a substantial 9.9% increase on the previous year.
While every capital city, except Darwin, recorded a rise in dwelling values, performance varied across states and regions. Perth leads with a significant 1.9% growth, closely followed by Adelaide, Brisbane, and various regional areas.
This upward trajectory is likely to continue throughout 2024, albeit at a slower pace, as the ongoing undersupply of housing relative to demand adds to the diverse performance across cities and regions.
National Home Value Index
The National Home Value Index, which measures daily movements in the value of Australian housing markets, rose by 0.6%, marking an impressive 14 consecutive months of growth, equating to an average increase of about $72,000 in property values.
Housing values are now rising at a pace faster than seen at the end of last year, according to CoreLogic, however, several factors are contributing to a nuanced market outlook, including rate hikes, cost of living pressures, and worsening housing affordability.
Factors Impacting Property Prices
Property prices are influenced by a combination of factors, but are primarily linked to two fundamental economic principles: consumer confidence and the dynamics of supply and demand.
Consumer confidence reflects the sentiment and outlook of potential home buyers and investors. When consumer confidence is high, people are more willing to make significant financial commitments, such as buying property, increasing demand and competition amongst buyers, and consequently pushing up prices.
Strong auction clearance results are a clear indication of current sentiment and buyer appetite, despite a surge in properties being auctioned each week, with some FOMO (fear of missing out) already creeping in as house prices are being pushed up.
The dynamics of supply and demand directly influence property prices. When there’s a shortage of properties relative to the number of buyers, demand exceeds supply and there’s more competition amongst buyers leading to higher property prices.
Strong population growth has resulted in an increased demand for housing, placing pressure on housing supply, as reflected in the low rental vacancy rates and higher house prices. At the same time, new listings are spending less time on the market, intensifying competition amongst buyers.
Get Expert Financial Advice
Navigating Australia’s property market can seem daunting, particularly as we move through changing property cycles and the need to adapt property strategy becomes increasingly important. Partnering with a mortgage broker provides access to a diverse lending panel and personalised advice at every stage of the home buying journey.
As the property market gears up for a strong 2024, there’s no better time to secure your financial future with expert assistance from Mortgage Express. Contact the team at Mortgage Express today to get tailored financial advice aligned with your unique circumstances and situation.
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