Increasing stock levels will create a more balanced property market in 2024, but prices will still climb, according to LJ Hooker Head of Research Mathew Tiller.
Mr Tiller said strong demand from a wide selection of buyers would include downsizers, upsizers, investors and tenants looking to exit the rental market.
Despite a backdrop of higher interest rates reducing buyers’ borrowing capacity, home values are tipped to rise, although this would be tempered by a jump in the number of properties coming to market.
Mr Tiller said recent inflation and employment data indicated the Reserve Bank of Australia (RBA) had finished, or was close to finishing, its interest rate hiking cycle and there was potential for the RBA to cut rates later this year.
“While recent events, particularly comments from the US Federal Reserve, have seen the market now pencil in rate cuts earlier in 2024 than expected, the most likely outcome is for a long period of rates on hold, with rate cuts closer to the end of 2024,” Mr Tiller said.
“More homeowners will look to capitalise on the recent strong price growth and take the equity to upgrade their homes or downsize into retirement.
“Additionally, more mortgage holders who are struggling with repayments will also look to sell, now more confident that they can sell with some equity in place.”
Mr Tiller said more listings would spell better choice and market balance for buyers, while the affordable sections of the market would perform better than their more expensive counterparts.
He also expects the gap between house and apartment prices will narrow further.
“Likely hotspots for 2024 will be suburbs where values have steadied or fallen during the past year but will be attractive to buyers because of affordability,” Mr Tiller said.
“Also, suburbs that have a median price that is better for the budget compared to neighbouring suburbs should see a solid demand.”
Mr Tiller also said a lack of new housing being built would continue to be an issue in 2024.
But he said there would be a little good news for renters, with weekly rents tipped to increase at a slower rate than in 2023, but there would still be pressure on household budgets.
This could result in an increase in household sizes, a rise in demand for share houses and spur young people to move back in with their parents.
In Sydney, Mr Tiller said Dee Why would prove popular on the back of apartment prices falling 8.4 per cent in the past year, while Glenmore Park offered good value for families, with its median price dropping 2.4 per cent to $1 million.
Raby, in Sydney’s southwest is also more affordable, with its median price dropping 1.8 per cent to $865,000.
In Melbourne, Mr Tiller said falling values in Croydon South, Carrum Downs and Bayswater North could see these suburbs grow in popularity.
In Brisbane he said buyers would look for suburbs with attractive price points, such as Taringa, which has a median house price of $1.587 million, which is up 9.10 per cent during the past year.
“Stabilising prices on parts of the Gold Coast, such as Elanora and Arundel, will add to their appeal,” he said.
Mr Tiller said in Hobart, the suburbs of Kingston and West Hobart recorded a decline in value of 10 per cent and 12 per cent respectively, making them an option for budget-conscious buyers.
In Adelaide, Mr Tiller said Payneham was the suburb to watch.
“Median unit prices there have surged 9.4 per cent to $396,000 making it an attractive investment,” he said.
“Likewise, Plympton Park showcases solid buyer demand with low days on the market and its median price up 5.9 per cent to $775,000.
“Similar market conditions in the inner north Perth suburb of Bayswater, make it a likely hotspot in 2024.
“Its median price has increased 6 per cent to a median house price of $747,000 over the past year with solid demand.
“Homes in Greenfields, located in the Mandurah area south of Perth, are spending just 12 days on the market indicating strong buyer demand.
“Its solid rental yield combined with a 15.3 per cent in house prices will attract investors.”