New year, new market?

We are into our second full week of trading for 2024 and the question on everyone’s lips is “what will the real estate market do this year?”.

Following 13 rate increases since May 2022, the jury is still out on whether the next move will be up or down. However, interest rate hikes have warily become less concerning and ominous as the property market has so far refused to succumb to their pressures. In fact, dwelling values rose another 1.5% in the December quarter alone.

Last year market activity petered out as it usually does towards Christmas. Potential sellers get to a cut-off point where they decide to hold back till the following year to list their homes rather than risk a rushed campaign and an unsold property. To that end, we have seen properties start to trickle onto the market and expect that this will continue as vendors look to complete the process by Easter. This is traditionally the transition period where we switch from summer campaigns to winter, although Easter falls a little earlier this year.

So what is the prediction for 2024?

Here is a snapshot from CoreLogic of what’s happening and some signs of what’s to come.

• The value of residential real estate was an estimated $10.3 trillion at the end of December, which was relatively steady on the previous month.

• Both the combined capital city dwelling market and the regional dwelling market saw a rise of 1.5% in the December quarter.

• The growth trajectory for housing values across the combined capitals has broadly slowed since late May. However, the pace of growth remained relatively steady through the four weeks ending January 10th.

• In 2023, CoreLogic estimates there were 488,898 sales nationally. This is -2.8% lower than in 2022, but sales are now trending slightly higher than the five-year average.

• The median time it takes to sell a capital city home was trending lower through 2023 but moved slightly higher in the December quarter to 29 days.

• Discounting rates also narrowed in 2023 as selling times reduced. Across the capital cities, the median vendor discount shrank from -4.3% in the December 2022 quarter to -3.5% in the December quarter of last year. Towards the end of last year, there was a slight deterioration in the median vendor discount.

• As with the capital growth trend, the final clearance rate across the combined capital cities market trended lower at the end of 2023. In the four weeks ending 17 December, the average final clearance rate was 58.9%. This was down from 62.5% at the end of November, though still higher than the 55.1% average recorded in the same period of 2022.

• Australian rent values increased a further 0.6% in the month of December, taking the national annual increase to 8.3%. Annual growth in rent values has accelerated slightly, from the 8.1% increase recorded in the 12 months to October.

• Dwelling approvals increased 1.6% in November, driven by a 7.2% increase in the more volatile unit segment. Approvals trended a little higher over 2023 but remain relatively low overall. For the past six months, monthly dwelling approvals have averaged 13,760 a month, below the decade average of 17,254. Cost of materials and borrowed funds could be contributing to this.

• Rent values have had three strong years of consecutive increases, against mixed capital growth performance. The influx of immigrants and lack of supply has greatly influenced this statistic.

The RBA Board will next meet in February 2024, moving to its new meeting schedule of eight meetings a year. My feeling is that they will keep rates on hold at their first meeting of the year.

All sellers want to get top dollar for their home, particularly in times of financial burden. When interviewing agents, be careful to not be lured by the promise of a price that can’t be substantiated. Although there is good demand, buyers are being a lot more measured in their approach to borrowing and buying. It is important to get the pricing right from the outset and to receive the right advice on strategy to get the best outcome. Make sure you stand out in your market with excellent presentation and marketing.

The year seems to have started with promise as buyers are turning out in numbers to find their next home. If you are considering selling, contact me so I can discuss the best option and strategy for you.