The property market trends you can expect next year
As we fast approach the end of 2023, the Australian real estate landscape is showing clear indications of the trends that will dominate in 2024.
From shifts in buying behaviours to the rise of urban spread, 2024 is predicted to be yet another dynamic and exciting year in Australian property.
Both buyers and sellers must remain informed and strategic in navigating the evolving property market.
As we usher in 2024, it's evident that adaptability is key.
While things might seem different on the surface, there are some fundamental aspects of property that remain unchanged.
With that in mind, here are some of the key trends to watch for and my top tips for navigating the property market in 2024:
1. Long delays in buying a home
The general timeframe for buying a home has been stretched, with it now being common for the process to take up to a year. This year has witnessed the slowest conversion rates yet, a trend that is expected to persist in the coming year.
Fierce competition in high-demand areas leads potential buyers to spend more time searching for the perfect property or spend longer waiting for the right opportunity.
Financing and loan approval is also another area of delay with stricter lending criteria and diminished borrowing power putting a dent in buyers' budgets.
Lastly, time-consuming inspections and settlement processes tend to draw out buying time frames as buyers are mindful of doing their due diligence.
2. The rise of more new apartments
While the surge in brand-new apartments entering the market has given buyers more options to choose from, freshly built housing comes with its own set of risks.
Due to tighter time constraints around the construction of these properties, building defects and the lack of insurance are a deadly combination for prospective buyers.
A NSW government report found that 39% of all residential apartment buildings constructed between 2014 and 2020 harboured serious defects in the common property. 23% had defects related to waterproofing and 14% were to do with fire safety.
This is a problem that isn't going away as 50%-60% of these defects are attributable to poor design and the clear conflict of interest in certification paid for by the builder/developers.
3. FOMO rears its head in purchasing decisions
Fear of missing out (FOMO) continues to be a significant factor influencing purchasing decisions when cool heads ought to rein. First home buyers keen to leave the rental market are especially vulnerable to its effects.
Despite the fastest interest rates hikes in a generation, Sydney property prices have defied all expectations to recoup two-thirds of the value lost during last year's slump.
4. AI makes its mark on real estate
While many agents have embraced AI for content creation, the consensus is that a human touch remains a critical part of service delivery.
AI's role during the COVID era showcased its potential to streamline processes, but the importance of physical inspections in the process of 'test driving' a home can't be undermined.
At a minimum two physical inspections need to take place for buyers to get a feel for a property. In the year ahead, the real estate industry will continue to integrate AI without compromising on the necessary physical elements of buying and selling property.
5. Single and grey divorce buyers on the rise
According to the latest census data, single households are becoming more prevalent than ever in Australia. This shift heralds an era where single buyers are able to achieve the sense of security that property ownership brings.
Since 2022, single female property buyers have been the fastest-growing home-buyer demographic despite the challenges of raising a deposit and servicing a mortgage solo.
6. Generational inheritance is on the rise
A notable increase in generational inheritance is influencing buying capacities and choices. As Baby Boomers reach their golden years, many are considering early inheritance as a way to pass on considerable resources to the next generation of property buyers.
As property prices spiral out of reach, generational inheritance is the only way many Australians can realistically breach the property market.
Others simply inherit the property their parents leave to them. Either way, this can be a lifeline for Aussies to gain a permanent roof over their heads so long as they ensure their tax liabilities are taken care of.
7. Slim pickings persist in the market
Property stock levels remain low, leading to competitive market conditions that show no sign of abating in 2024. Since listings peaked in March 2022, the number of new listings has been on a downward trajectory. Data indicates new listing volumes in June 2023 were 14.8% lower compared to June 2022.
Property - especially A-grade properties - will remain as desirable as ever meaning there will be no shortage of competition for freestanding family homes.
Property prices will continue to remain stable with little wiggle room to negotiate except for where there is a glut of lower-quality builds such as apartments in less desirable locales.
8. More investors are selling up
An uptick in investors selling properties often with tenants still in place is indicative of the effects of mortgage stress on landlords. Quick sales like this present challenges for first home buyers who are in the market for these types of properties but are hamstrung by the presence of existing tenants.
Given this scenario, potential buyers might benefit from temporarily staying with mum and dad in order to secure the property they want. Cashed-up buyers stand to benefit from landlords divesting themselves of expensive properties if they keep their eyes and ears open to opportunities as they arise.
9. Interest rates to come down and prices to go up
With interest rates tipped to fall at some point in 2024, we will see more buyers seeking entry into the market. The government's bid to fix housing affordability and ensure more first home buyers gain a foothold on the property ladder will drive significant activity.
There's a prevailing sense of urgency to lock in purchases now to nab a home before prices rise even higher. This further fuels the sense of FOMO and exacerbates the likelihood of a hot property market in 2024.
Want more property outlooks? The February 2024 issue of Money will reveal the top 50 suburbs to buy real estate in the new year!
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