Preeminent Expert Reveals 2024 Housing Market Predictions
Sydney and Melbourne likely to fall, Perth and Brisbane set to rise amid improved iron ore demand from China
3 min
The Australian housing market will deliver a mixed performance in 2024, with Sydney and Melbourne home values likely to fall and Brisbane and Perth prices likely to rise. That’s according to Louis Christopher, the Head of Research at SQM Research and one of Australia’s preeminent experts on property prices, who has just released his annual Housing Boom and Bust Report 2024.
Mr Christopher has outlined his base case for property prices next year based on a cash rate of between 4.1% and 5% (the Reserve Bank raised the rate to 4.35% this month), slower but still elevated annual population growth of 460,000 people or less, and the unemployment rate rising to between 4.5% and 5.5%. He also outlines what may happen in other scenarios, including a global energy crisis brought about by current events in the Middle East, and higher population growth above 500,000 people per year.
At a national level, Mr Christopher’s base case forecasts a -1% to 3% price movement across the weighted combined capital cities. He explains: “… with expected slowing employment growth and the corresponding rise in unemployment, tipped to be towards 5% by the year end 2024, this negative will more than offset another year of strong migration. The interest rate rises of 2022, 2023 and possibly 2024 will finally start to bite homeowners and would-be homebuyers alike. Distressed selling activity is expected to jump, especially in NSW where we are already starting to see a new trend upwards in that data set.”
Looking at the cities individually, Mr Christopher forecasts a fall or very weak price growth in Sydney and Melbourne next year in his base case scenario. He tips a -4% to 0% price movement for Sydney and a -3% to +1% change in Melbourne. This would follow surprisingly strong price growth in Sydney this year despite interest rates still rising throughout 2023. Sydney dwelling values have lifted by an extraordinary 10.9% in the year to 31 October, while Melbourne home values have lifted 4%, according to the latest CoreLogic data.
Mr Christopher said continuing strong population growth (albeit lower than in 2023) and housing supply constraints will limit price falls in Australia’s two biggest cities. Historically, Sydney and Melbourne attract the lion’s share of migrants, so the significant current surge in international arrivals is likely to offset the affordability challenges created by a slower economy and 13 interest rate rises since May 2022, which have curtailed borrowing power and loan serviceability.
Christopher says home values will fall the most in Canberra, down between -8% to -4%, and Hobart, down between -7% to -3%. The combination of a fall in Federal Government spending plus an expected strong increase in dwelling completions will create a softer market in Canberra. The city is one of very few in Australia recording a lift in housing supply as the city embraces apartment living for the first time in its history. Known as the Garden City, Canberra is dominated by houses on family-sized blocks, but in recent years the ACT Government has gradually allowed for higher density stock, including dual occupancies on larger blocks and apartment buildings in major residential centres such as Belconnen and Woden.
On the other side of the coin, Mr Christopher predicts 5% to 9% price growth in Perth and 4% to 8% growth in Brisbane. He says these two cities are likely to benefit from tailwinds created by a recovering Chinese economy and an anticipated lift in demand for iron ore and other commodities. “Perth and Brisbane are still very likely to record price rises based on super tight rental conditions, a better-than-expected global commodities market and minimal exposure to the financial services sector, where we believe there maybe be significant job losses,” Mr Christopher said.
The bulk of Australia’s mines are located in Western Australia and Queensland, and fly-in, fly-out workers commonly base themselves and their families in the capital cities. The iron ore price closed at US$137.50 per tonne in overnight trading – its highest level since May 2022 – and is up almost 20% over the past month, according to Trading Economics data.
This is largely due to the Chinese Government announcing new stimulus targeting infrastructure and manufacturing to counter deflationary pressures in the economy. China imports 70% of the world’s annual iron ore supply, making it the biggest consumer globally, according to Federal Government data. Top broker Citi is forecasting the iron ore price to average US$140 per tonne over the next three months due to the anticipated higher Chinese demand.
Mr Christopher said property prices in Adelaide and Darwin are anticipated to remain steady or record a minor price rise or correction. The base case forecast is a 0% to 3% price movement in Adelaide and a -3% to +1% change in Darwin next year.
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3 min
Australia’s housing crisis will not be solved by first-home buyer incentives or tax changes alone, with leading property figures warning governments must tackle supply constraints if affordability is to improve.
Speaking at the Kanebridge Quarterly Property Leadership Summit in Sydney last week, expert project marketing specialist Sam Elbanna, property investor and fund manager Paul Miron and property consultant Karla McNeice said that a lack of housing supply remained the central issue facing the market.
Elbanna, Director of CPM Realty with more than 30 years’ experience in project sales, argued that successive governments had focused too heavily on stimulating demand rather than addressing the barriers preventing new housing from being delivered.
“The misconception is that politicians think the way to solve the housing crisis is to drive demand,” he said.
“The reality is that’s not the way. This is a supply-side problem, and it needs to be solved on the supply side.”
Drawing on his experience in project sales, Elbanna said policies designed to help first-home buyers often had unintended consequences, pointing to previous grants that ultimately flowed through to higher property prices.
Instead, he said developers were facing increasing red tape, approval delays and rising costs, which were discouraging new housing supply.
“In the absence of stock, demand exceeds supply,” he said.
Miron, a Co-Founder and Fund Manager of Msquared Capital, said the housing debate had become overly focused on tax policy while overlooking broader structural issues.
He argued that affordability challenges stemmed from a combination of factors, including planning constraints, supply shortages, migration levels and interest rates.
“No-one can be 100 per cent certain on the real reason for property prices is going up,” he said.
“The reason why property prices are higher is a combination of interest rates, lack of supply, migration, vacancy rates and maybe taxes play a role.”
Miron was critical of recent federal housing policy changes, warning they could reduce the number of new homes being built and further constrain supply that was even highlighted in the budget.
He also highlighted the importance of the property sector to the broader economy, noting that residential real estate and related industries employed more than one million Australians.
McNeice, who advises developers on sales strategy and market intelligence, said understanding buyers had become increasingly important as affordability pressures intensified.
While affordability remained a major consideration, she said today’s buyers were focused on value rather than simply price.
“People are looking for value for money,” she said.
She said buyers were increasingly evaluating factors such as transport connections, walkability, nearby amenities and flexible living spaces that could accommodate changing family needs.
“What infrastructure is going on? Can I walk to the shops? Can I meet people at the local cafe?” she said.
The panel also discussed the mounting pressures facing developers, with Elbanna arguing that many projects become financially unviable from the moment a site is purchased.
“The viability of a development happens at the moment the site is bought,” he said.
He said rising construction costs, higher interest rates and overly optimistic feasibility assumptions had left some developers exposed as market conditions changed.
While acknowledging the growing number of smaller and first-time developers entering the market, Elbanna said property development required expertise across finance, construction, marketing and legal disciplines.
“It is actually a business that requires a level of expertise,” he said.
Looking ahead, the panel agreed opportunities remained in the market despite current challenges.
Miron said property should continue to be viewed as a long-term investment and cautioned against trying to time short-term market movements.
McNeice said success would increasingly depend on identifying projects that genuinely met changing buyer expectations.
Elbanna said affordable housing remained achievable, but developers needed to deliver more than just homes.
“We can provide affordable housing in this country,” he said.
“But we’ve got to wrap that affordable housing with the things that people want.”
As Australia’s housing affordability debate intensifies, the panellists agreed on one point: without a meaningful increase in housing supply, demand-side measures alone are unlikely to solve the nation’s property challenges.
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