Is Property Investment Worth It in Australia in 2024?

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Is Property Investment Worth It in Australia in 2024?

As the Australian property market continues to change, investors want to know if 2024 will present good opportunities to invest in property. The unexpected performance of the market, despite higher borrowing costs and limited housing, raises concerns on whether property investment remains a worthwhile venture in Australia in the coming year. We will examine several factors that could determine whether property investment will pay off in 2024 and highlight the considerations that potential investors should make. These include market performance, price levels predictions, and economic conditions.

Factors to Consider Before Investing in Property in 2024

Before making any investment decisions for 2024, it’s crucial to consider several key factors that could impact the property market:

  • Economic Indicators: As already mentioned, the GDP is expected to modestly grow, and the labor market will remain tight. The inflation will marginally decelerate, which will influence the property market, as will the expected rate cuts in 2024.
  • Interest Rate Trends: While the previous rate hikes put pressure on borrowers, the reverse adjustments will lead to a more vibrant market activity. This factor, as a property investment advisor would affirm, is highly important for forecasting the market dynamics.
  • Supply and Demand Dynamics: An ongoing trend of the imbalance between demand and supply will support the property price, albeit at different rates around the country. An investor should carefully consider how these two factors correlate across different regions.
  • Regional Market Performance: Properties in major cities have become exceedingly expensive. As a property investment advisor would note, recent trends demonstrate a more profound interest in investment opportunities in regional centers.
  • Technological Advancements: Recent advancements have transformed many industries, and real estate is no exception. Virtual tours, more precise AI recommendations, and faster processing will add up to the property cost in the corresponding area, by time and convenience of the clients.

Will Property Prices Rise or Drop in 2024?

Investors have mixed reviews on the Australian property market performance in 2024, with some expecting prices to surge further and others predict a downtrend. Indeed, several financial headwinds, including elevated borrowing costs and faltering construction industry, have been stifling the property market. However, the market has been more resilient and robust than observers have anticipated. According to Dr. Nicola Powell, Domain’s chief of research and economics, property prices “increased driven by detesting virus fatalities 2023,” registering a 5.42% growth in the year and a 6.54% in capital cities. As such, the data indicates that the market has defied 13 federal rate hikes during 2022-2023.

Several factors contribute to this resilience and suggest a continued upward trajectory for property prices into 2024:

  • Population and Housing Supply Shortfall: The balance between supply and demand significantly impacts property pricing. The Australian population has grown rapidly, especially with the resurgence of immigration post-Covid, which has significantly increased demand for real estate. However, the actual supply has not kept pace, leading to upward pressure on prices. Dr. Powell anticipates this trend will persist into 2024, forecasting price growth of 5% to 7%.
  • Economic Recovery and Interest Rate Cuts: The economic outlook for 2024 includes moderate GDP growth, a tight labor market, and a gradual slowdown in inflation. Many experts, including those who are buyers agent investment property specialists, anticipate potential interest rate cuts starting from mid-2024, which would lower borrowing costs and stimulate additional demand in the property market.
  • Regional Market Dynamics: A noteworthy trend is the shift towards regional markets. Cities like Melbourne and Sydney have become increasingly unaffordable, but regional markets such as Ballarat and Newcastle have seen a property boom. Investments in these alternative markets, which offer lower prices, and their diversification will likely create a broader base for property price growth.
  • Technological Advancements and Sustainable Living: The demand for properties with eco-friendly features and technological integrations is increasing. Living in such a property is more enjoyable, and it also adds value to the properties, even to the total market value, which means that segments that adopt such trends will have increasingly higher prices.

Given these dynamics, the property sector market is cautiously optimistic in 2024. Even though the growth rate is considered given the economic forces and policy changes’ influences, a buyers agent investment property specialist would note that the demand is consistent, while the new supplies are limited. This means that the prices of properties shall remain rising for long periods, thus making it worthy of considering investing.

Current Trends in Australian Property Investment

The Australian property market is undergoing significant transformations, with emerging trends shaping the investment landscape for 2024. Here are some pivotal movements investors should be aware of:

  • Sustainable and Green Living Spaces: Purchases of Sustainable Homes and Buildings Continue to Trend Property Buyers in Australia. As such, newly constructed buildings generally cater to solar panels, energy-efficient gadgets, and other environmentally conscious materials and technologies. In 2024, this trend is likely to have a significant impact on both commercial and residential property purchases, with such investments eventually turning green and, as indicated, continue creeping in as far as property valuation and attraction are a concern.
  • Rise of Regional Markets: The rise of WFH has fueled interest in Australian suburbs. Ballarat and Newcastle, Australian suburbs, are significant beneficiaries of this trend as they provide affordable alternatives to the cost-prohibitive prices in Sydney and Melbourne. Investors can take advantage of this trend to profit from places outside of the massive metropolitan areas where peoples shift based on who has the best quality of life.
  • Technology Integration: The sector is developing faster than any other time before, thanks to the utilization of technology. Virtual tours, AI-driven property recommendations, and using blockchain for secure transactions are commonplace. Anything that incorporates technology into the buying and selling experience makes the property more appealing to clients and buyers who expect to purchase tech-savvy homes. The house becomes more well-marketed as a result.
  • Market Resilience Amid Global Uncertainties: The property market in Australia has proved to be particularly undeterred by changing global circumstances such as economic downturns. The inability to influence this sector has made it an appealing option for those taking shelter from the global turbulence. Investors feel safe investing in Australian property because it is a somewhat “safe” asset class that is forecast to remain stable and observe growth in the future.
  • Changing Demographics and Housing Needs: On the other hand, the structure of the Australian population is changing. People get older, and families become smaller in numbers. As a result, demand is rapidly increasing for both multigenerational homes and properties that would comfortably house the elderly. This risk depends not on Australian politics or the economy but rather on demographic factors. Therefore, to be able to forecast the market and make investments that meet the new requirements, one needs to keep track of a wide range of industrial and political changes.

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Predicted Property Price Growth in Major Australian Cities

Thus, based on the provided forecasts of CoreLogic’s Eliza Owen and Domain’s Dr. Nicola Powell and the analysis of the four major banks’ projections, the outlook for property prices in the country’s major cities in 2024 is mixed but moderately positive. Here’s what the data suggests:

  • Sydney: following a tough period, Sydney is expected to recover with a 5% growth in 2024. Some of the reasons that underpin this recovery include strong demand for housing, mainly driven by increased immigration and limited supply. These make Sydney a hotspot for property investment.
  • Melbourne: Melbourne is also expected to register a 4% rise in property prices. Even though the values of homes slightly fell towards the end of 2023, the market seems robust owing to the high demand for sustainable living spaces and the incorporation of technology in buildings.
  • Brisbane: with 5% projectile, Brisbane’s property market is expected to ride on the regional market boom. Most buyers are turning their eyes from Sydney and Melbourne owing to their higher costs. Interestingly, with the shift in lifestyle to remote working, most people fancy the much cheaper Melbourne and Sydney properties.
  • Adelaide and Perth: The two cities will exhibit growth rates of 4% and 5%, respectively. Some of the readily noticeable indicators of the promising nature of Perth and Adelaide are the low number of advertised stocks and high sales ratios, making them the most prospective metropolitan markets for possible growth in 2024.
  • Hobart, Darwin, and Canberra: Growth prospects in Hobart will be modest at 2%, Darwin will remain stable, while the nation’s capital might see growth of 4%. The vast performance variability indicates that the local state and demographic conditions remain the critical forecasters of the property investment results.

FAQs

Will the housing market crash in 2024?

 Projections indicate that housing prices in Australia are set to stabilize, with a return to sustainable levels of growth in 2024. The rate of deceleration will depend on the prevailing inflation trends and the anticipated reduction in interest rates towards mid-year. There is no specific expert opinion of such a crash as many predict caution

Is 2024 a good year to invest in property in Australia?

With the modest projected rate of growth in property prices in the Australian market and the country’s resilience to external factors, investing in 2024 will require careful considerations. The location, type of property, and long-term trends in the market make the property business a worthwhile endeavor in Australia in 2024.

How much does an average house cost in Australia?

House prices in Australia have been unpredictable, hitting peaks during the pandemic only to drop in 2022, with some markets making some recoveries in 2023. As of the most recent data, the average house goes for $925,400, up from $678,500 in 2020, an indication of the high volatility in the industry due to various economic factors.

What is the property market forecast for Melbourne in 2024?

Melbourne property prices are expected to continue growing in 2024. Expert opinions from ANZ and CBA project growth between 3% and 5% due to the city’s demand driven by demographic shifts and the appeal of Melbourne’s lifestyle and business landscape.

Is it worth having an investment property in Australia?

The worth of taking up an investment property depends on the specific purchase, as well as other factors such as location and timing. With a market forecast of modest growth and the high demand for homes, it is a worthwhile investment. Nevertheless, you should consult a property investment advisor or a buyer’s agent, consider your goals and aspirations in the market, and conduct a risk analysis.

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