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Ben Kingsley Blog post by Ben Kingsley

Property Market Update – Positive Start to 2024

As part of the Empower Wealth community, I wanted to share with you my initial thoughts on the property market in 2024.  

Based on indications from our team on the ground and the initial data we are collecting, the property market in 2024 has begun stronger than initially expected. 

What is interesting about this shift in the market is the turnaround from a cooling market in late 2023, where supply was increasing, and demand levels were waning, with the exception being the Perth market and pockets of Adelaide and SE Queensland. 

Several developing factors are now in play, starting with a forecast change to interest rates in the second half of 2024. 

The current interest rate settings are in restrictive territory to slow down inflation. Currently, inflation remains too high but is working its way back down to the 2-3% target range set by the RBA. Furthermore, Michelle Bullock, the RBA Governor, recently, at a Senate committee hearing, commented that the RBA is willing to move on rates before this target range is reached, considering the lagging effects movements in the cash rate have. 

Supporting this case for a rate decrease was better than expected inflation data released early this month and an increase in the unemployment rate, combined with reduced consumer spending—all pointing to a further slowing in the economy, as designed by the current cash rate settings. 

The anticipation of several forthcoming rate cuts is potentially bringing buyer intention and activity forward to avoid the anticipated buyer rush when rates eventually come back down to more accommodative settings. As falling interest rates are usually a good indicator of shorter-term property price growth, buyers appear to be wanting to get in before the anticipated rate cut rush. 

CoreLogic’s data is also supporting this view, with Auction Clearance Rates (a good lead indicator of market demand) spiking in February as the major capital cities reopen after the summer break. Here is what Tim Lawless said after the 17th of Feb weekend results: 

Comment from CoreLogic research director, Tim Lawless: 

With 2,044 auctions held, this was the highest volume of auctions so far this year.  Demand from buyers has kept pace with the pick-up in activity, with the preliminary clearance rate coming in at 75.4%, down slightly from last week (76.2% which revised to 70.3% on final numbers).    

For some context, the preliminary clearance rate settled in the mid 60% range at the end of last year and final clearance rates were in the mid 50%’s. With the preliminary clearance rate holding above 73% for the past three weeks, it’s probably fair to say the stronger auctions results are attributable to more than early year seasonality; some confidence has returned to the auction markets amid falling inflation and a growing expectation that lower interest rates later this year could see housing price growth accelerate. 

Tim and I once again appear to be on the same page with our views. 

 Building on this case for a stronger start to the property market in 2024 is the level of building approvals. Current levels are insufficient to meet existing or future levels of demand, when you combine them with the record levels of immigration we have experienced over the last 12 months. And while immigration levels are set to halve in the next 12 months, that still equates to over 250,000 to 300,000 new arrivals needing housing.  

This supply shortage also leads to upward pressure on property prices in the short term. 

Add to this the trend in increased listings at the back end of 2023 before the recent slowdown in January, and it’s clear in the data that we are seeing increased activity in the property market as we get going in 2024. 

If you’d like to get access to these charts, check out CoreLogic’s February 2024 Chartpack here >

We’re here to Help:

Of course, you already know that we’re here, ready and able to sort out your finances and get you the best loan for your situation through our Free Finance Review here > 

In addition to our professional expertise, here are some other resources we can provide: 

Just remember you can reach out to our team at any time for a free and no-obligation initial consultation if you have any lending or property market question, and I’d hate to see you missing out on securing a property, if you’re still thinking about buying. 

Knowledge is Empowering, but only if you Act on It.

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