Biggest state capitals tipped to reclaim place at top of property tree
Perth and Adelaide have been the property success stories of 2023 but which cities and regional areas are set to deliver real estate investors the best gains in 2024?
Australia’s property market has finished 2023 on a high, surviving the ill-informed, doomsayer predictions of market collapse from rising interest rates.
There wasn’t the predicted wave of distressed sales when low fixed interest rates came up for renegotiation and values didn’t take a dive.
The market showed once again that real estate is a strong asset in Australia, and I predict it will continue to perform well in 2024.
Yes, price growth did soften at the start of 2023 after hitting significant highs during the pandemic, but a continuing lack of new supply and a growing population, meant it rallied by the end of the year.
As a result, 2024 is shaping up to be another positive year in residential real estate.
Australia does consist of many different property markets, which do tend to move in different directions and at different speeds but overall the market in 2024 will be one of steady and sustainable growth in most capital cities and regional markets.
Our recent analysis of transaction levels in every market in Australia shows there are more positive markets than negative ones. That is, more markets with steady or rising transaction levels, and there is no better indicator of future price growth than growing demand.
Just as 2023 defied the forecasts of economists and news media, 2024 will do better than the pessimistic predictions that emerged late in 2023.
Why did forecasters get it wrong?
How do the analysts get it so wrong? The biggest mistake most make is that they believe the biggest factor impacting property prices is interest rates.
That’s a very simplistic way of looking at the market.
History has shown us on numerous occasions that multiple increases in the cash rate won’t result in property price drops.
The biggest issue affecting the property market at the moment can be distilled to one word: shortage.
There are too few new dwellings being built, there are not enough homes for sale and there are not enough properties in the rental pool.
These are issues that can’t be quickly resolved.
Those (and by that, I mean governments of all levels) looking for a solution are focusing on the wrong things.
Rent freezes, levies for short-term holiday renting and taxing landlords more will result in fewer rental properties being available – not more.
Where to look for capital growth in 2024
The lack of rental properties is pushing more people into the buying market and the building industry, weighed down by rising costs and a lack of workers, can’t produce homes fast enough to meet demand.
All this together means that the demand in 2024 will be as strong as ever, and what we know about increased demand is that it leads to increased prices.
My forecasts for 2024 are that we’ll continue to see growth in Sydney, Melbourne, Brisbane, regional Queensland and regional NSW.
Adelaide, regional South Australia, regional Victoria, Hobart and regional Tasmania will remain steady markets, while growth will weaken in Perth and regional Western Australia, after three years of solid growth.
Canberra, which is the weakest I have seen it in eight years, and Darwin markets will struggle.
