Property price haven in cost-of-living storm but challenges grow for house hunters

Caught in a cost-of-living crisis, most homeowners can take solace in one reassuring fact: property values across most of the country are forecast to rise through 2024.

Anna Hilton, with children George, 6, and Pippi, 3, is hoping to get on the property ladder in Brisbane this year as prices are forecast to rise. Picture: Lyndon Mechielsen

Caught in a cost-of-living crisis, with mortgage repayments having surged and electricity bills following suit, most homeowners can take solace in one reassuring fact: property values across most of the country are forecast to rise through 2024.

The nation’s banking and property experts are expecting the price of the median home to jump by up to 5 per cent in the next 12 months, with Perth, Adelaide and Brisbane the hottest markets.

A shortage of buyer choice and lingering fears of a Reserve Bank-driven mortgage cliff will keep prices growing or steady, and many homeowners across the nation happy as they prepare for the added relief of a rate cut or two on the horizon.

Perth is set to be the biggest mover for the second year in a row – up by five to eight per cent in the 12 months according to PropTrack – with Adelaide coming in second with house prices growing of four to seven per cent.

But for home hunters like Anna Hilton, 37, looking to get into the market, it’s set to be another hard slog in 2024.

Ms Hilton is looking for a Brisbane suburban home in the inner west for herself, George, 6, and Pippi, 3.

But with residential property prices predicted to rise by 3 to 6 per cent in the Queensland capital this year, Ms Hilton will need to move quickly to secure her dream home.

“I am optimistic,” Ms Hilton said. “I hope it will be calmer in 2024.”

“I feel like in the last six months there was a lot of property around on the market, particularly around August and September. Then it really started to peter out in late November, December. So, I’m just going to look and wait and see what comes on the market.

“There’s a lot of smaller places that I think are investment properties starting to come onto the market now. I’ll be keeping an eye on those as well.”

It’s a slim hope, however, with analysts expecting Brisbane too to climb three per cent to six per cent higher.

Decade-high interest rates will continue to temper growth in the country’s two largest markets, but both are still expected to rise. PropTrack predicts Sydney home prices to increase two per cent to five per cent, while Melbourne should increase a smaller one to four per cent.

While property prices did fall through the latter half of 2022, last year returned the market to fresh highs. Since the turn of the decade, housing is now 36.5 per cent more expensive nationally because of the pandemic boom.

The strongest performing parts of the past year were in Perth and surrounding areas, according to PropTrack analysis exclusively for The Weekend Australian. Regional analysis of property price growth and falls through 2023 found the West Australian capital’s north and south-west increased 18.23 per cent and 15.29 per cent respectively. Even the affordable southeast of the city gained 16.22 per cent.

At the other end of the spectrum, prices in the regional Victorian towns of Ballarat and Warrnambool reversed almost four per cent.

PropTrack’s director of economic research, said Cameron Kusher the peak of interest rates should return the market to a sense of normality.

“The fact that we’re likely to get stability interest rates very early next year, which is going to give people more certainty,” he said.

Managing director of The Demographics Group, Bernard Salt, believes the incredible rises in recent years also boils down to millennials like Ms Hilton, who are now looking to trade in the cafe lifestyle and convenience of the inner-city where they might own an apartment or rent, for their piece of suburbia with a lawn and gardens.

Now aged in their late 20s to early 40s, many are now entering they “family formation stage” and buying up the homes now being sold by empty nest baby boomers.

“From the millennial perspective, their income continue to rise and have risen every year, certainly over the last 10 years,” Mr Salt said.

“So, confidence is up and their needs have shifted by their late 30s, early 40s.

“With five million people … pushing into that stage in the life cycle where they need their forever home, then you get people competing and taking on more debt in order to achieve that.”

David and Susan Mackintosh with daughters, Zoe, Brooke and Ella in Sydney’s Cambridge Park. Picture: Nikki Short

Elder millennials David and Susan Mackintosh, aged 45 and 43, are looking for their “forever home” on NSW’s Central Coast to raise their three little ones. Mr Mackintosh bought their current property in Cambridge Park, in north west Sydney, back in 2003 for $268,000. It is currently on the market for $1.1m.

“This move would be till at least my youngest finishes high school, about 15 to 17 years,” he said.

“I knew the property market has been good, but we haven’t sold yet, so the house isn’t worth that until someone pays for it.”

Managing director of national real estate agency Ray White, Dan White, said Australia’s strong economy will hold up the real estate market and see it continue to perform.

Ray White managing director Dan White.

“The real estate market won’t operate in a bubble,” he said.

“Unless you’re predicting a really tough economy, I think the housing market should do okay”.

On the financial side of the equation, unemployment remains tight and nearly a million homeowners have so far avoided falling off the mortgage cliff as their ultra-cheap fixed mortgages expired by using up their saving buffers. In fact, the number of people falling behind on their mortgage repayments is still below one per cent.

While the balance of power is the hands of property holders in most areas, not all is equal. PropTrack estimates Hobart may fall 2 per cent or gain 1 per cent as the market continues to cool after becoming red hot through the pandemic.