Throughout 2023, the property market has been hit by an unprecedented rise in interest rates, housing supply issues, and an ongoing rental crisis.
Data-led buyer’s agency InvestorKit has revealed the five top trends in the housing market and the challenges and opportunities that come with them as we trudge on into 2024.
1. A recovering housing market
According to InvestorKit research, stabilising interest rates and boosting consumer confidence will see the housing market begin to recover after more than a year of rising rates.
Growth in wages and the planned stage 3 tax cuts in July are expected to drive consumer confidence, while the upward trend in home loan commitments is a leading indicator of confidence recovery.
2. Affordability driving popularity
InvestorKit has found that buyers will continue to favour affordable locations with strong rental yields.
Borrowing capacity and mortgage serviceability are set to continue to heavily influence property buyers as interest rates remain elevated for the majority of 2024 and as a result affordable locations with good performance will continue to attract investors and owner-occupiers.
3. The rental crisis
With national vacancy rates approaching historic lows, there are signs that the rental crisis will continue into 2024, including increased migration into capital cities; declining household sizes; lack of social and affordable housing; a lack of new supply; and a decline in rental stock due to lowered investor activities.
4. Supply shortage continues to be the main driver
InvestorKit’s research has found that the 30 per cent decline in houses for sale across the country over the last three years is expected to continue into 2024 with no quick recovery.
New supply is struggling to meet demand, leading to an expected dwelling shortage of more than 100,000 by 2027.
This shortage, combined with population growth, could mean that supply shortages will remain the primary cause of price growth over 2024.
5. Strong regional migration trends
Finally, the last trend sees Australians continue to relocate to the regions from the capital cities, with the main drivers behind the migration being lower cost of living, better work/life balance, booming local communities, improvements to infrastructure, and employment opportunities.
In addition, companies implementing hybrid work models are also encouraging city dwellings to move into the regions.
Arjun Paliwal, founder and head of research at InvestorKit, said: “2023 has been a challenging year for the Australian property market, with renters, owner-occupiers, and investors all feeling the pinch. At the heart of our current housing challenge are fundamental supply and demand issues.
“Increasing regulatory and lending restrictions, consistent rate hikes, and an unfavourable investor environment are key factors dampening investor sentiment and driving our nationwide stock shortage.
“Moving into 2024, we are working with our clients to unlock opportunity through ‘momentum’ investment strategies, finding attractive investments in overlooked areas that the data shows are set to outperform, both through capital growth and rental yields.”
