Most analysts tip that Australian home values will be far more subdued in 2024 after rising by 8.1% in 2023, according to CoreLogic.
“In the first half of 2024, dwelling value growth will be tested by the interaction of high interest rates and weaker economic conditions, both of which are likely to weigh on housing activity”, noted CoreLogic Research Director, Tim Lawless, in the firm’s December housing market report.
However, “at the end of December, financial markets were fully pricing in a 25 basis point rate cut by June 2024”.
“If interest rates do move lower, there is a good chance we will see a lift in consumer sentiment and a more positive trend in housing activity and values through the second half of the year”, Lawless added.
On factor that should keep a floor under prices in 2024 is the dearth of homes listed for sale.
The next chart from Justin Fabo at Antipodean Macro shows that for sale listings, as measured by SQM Research, are tracking around 30% below the levels of a decade ago:
Separate data from CoreLogic also shows that total for sale listings are tracking well below last decade (see red line):
Source: CoreLogic
That said, there is wide divergence in listings between jurisdictions.
As shown below, Sydney and Melbourne experienced a rise in listings in the year to December, whereas listings fell across the other capital cities with the exception of Canberra:
Source: CoreLogic
This helps to explain why Melbourne and Sydney house price growth has softened far more than the other three major capitals, according to CoreLogic:
Regardless, while there will be differences among jurisdictions, the overall slump in for sale listings should support prices in 2024.
