By John Wills FAPI CPV JPManaging DirectorWILLS PROPERTY
Amidst the swirling currents of economic shifts, the Australian property market stands as a beacon of resilience. The echoes of anticipated interest rate hikes seem poised to test its mettle, but forecasts from major bank economists paint a picture that defies conventional expectations.
Riding the waves of a robust demand-supply imbalance, Australia’s housing market has continued its upward trajectory despite murmurs of inflation and impending rate increases. The stage set by CoreLogic's figures predicts an ongoing surge, possibly hitting record highs by mid-November this year, further paving the way for a projected rise between 3 to 5 per cent in 2024.
Forecasts
In the face of a market that defied expectations, values have not just stabilised but surged upwards, key players are prompting bolder forecasts for the coming year. This is in line with Wills Property’s view.
Gareth Aird, CBA’s head of Australian economics, anticipates a 5 per cent growth nationwide in 2024. His expectation of Melbourne’s outpacing Sydney's growth stems from a catch-up narrative, where the former’s prices have yet to scale the heights witnessed in Sydney this year.
Yet, amidst this optimism, a looming spectre emerges: the inevitable rise in interest rates. The anticipated quarter percentage point hike on Melbourne Cup Day is projected to be the last before a downward turn, possibly from September 2024. Economists like NAB’s Alan Oster acknowledge the strain on households but maintain that a 25-basis point rise should not fundamentally disrupt affordability for those currently in the market.
Cautions Undertones
However, the narrative isn’t without cautionary undertones. ANZ’s Adelaide Timbrell highlights the inflationary pressures exerted by the housing market’s excess demand, casting a shadow on the inflation trajectory.
The roadmap for 2024 seems peppered with divergence among bank forecasts. While NAB and CBA hover around a 5 per cent mark, ANZ pitches a more conservative 3 to 4 per cent rise nationally, emphasising a faster surge in Sydney.
The crescendo of these divergent forecasts harmonises around one fundamental truth: the market resilience, fuelled by a mismatch between population growth and housing supply. This imbalance remains the bedrock sustaining the upward momentum in property prices.
As the spectre of rate hikes looms, buyers and sellers alike brace themselves for a climate of uncertainty, the housing market, a barometer of economic health, stands resilient in the face of looming challenges, poised to chart a course that defies conventional wisdom.
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John Wills FAPI CPV JP
0467 44 38 38