The top 7 trends for 2024 borrowers

After a turbulent 12 months, 2024 is shaping up to be another challenging year for Aussies looking to obtain a mortgage and those already servicing one. Despite 12 rate rises, inflation remains stubborn and isn’t expected to fall to the RBA’s intended range of 2-3% until 2025. Parts of the housing market remain as robust as ever, with prices for standalone homes steadily increasing due to fierce competition and low stock levels.

This scarcity of housing combined with a construction industry in distress are major factors that are pushing more first home buyers into making the jump. However, tightened lending means these buyers are more restricted in their options than they were a few years ago.

With that in mind, here are some of the key trends to watch for in the mortgage industry in 2024:

First home buyers head for the fringes

Sydney’s property market continues to soar to new heights, with house and unit prices growing further out of reach for most first home buyers. Even with a healthy budget of $800,000 – the price cap for buyers taking advantage of the government’s first home loan deposit scheme – buyers are priced out of most of Sydney’s suburbs. Currently figures show the median price of a unit in Sydney is $817,059 while median house prices sit at an eye-watering $1,333,985. To stay within budget, first home buyers would need to search for properties on the city’s fringes on the west, south-west and as far as the Blue Mountains.

First homebuyers may have to consider properties on the city fringes. Image: Getty

Singles are being hit hard

Singles in Sydney are facing formidable challenges when it comes to entering the property market. For the most part, property prices in Sydney show no sign of falling which presents a major barrier for those on a single income. Limited housing affordability coupled with stringent lending criteria and the high cost of living further compounds the issue.

Many singles find themselves struggling to save for a substantial deposit, and even with the Federal government’s first home loan deposit scheme and the NSW government’s waiving of stamp duty among other concessions, buying property as a single is still difficult thanks to most properties exceeding the price cap for government assistance.

Female homeowners on the rise

The rise of female homeownership reflects the country’s rapidly changing economic and social dynamics. According to census data, 35% of all households in NSW are single households. Single parent households have reached unprecedented highs. Empowered by increased financial independence and the growing emphasis on gender equality, women are no longer solely reliant on men when it comes to property ownership. CoreLogic reports that women currently own 26.8% of Australian property, with 35.7% of apartments in the hands of female owners.

Divorce trends also play a role in this change as women increasingly have the means and motivation to buy out their male partner’s share in marital property settlements. Additionally, more women are pursuing homeownership independently, heralding a broader transformation of the property market as greater numbers of women aspire to invest in real estate.

Second marriages’ effect on home ownership

Second marriages often bring complex issues regarding home ownership, especially when safeguarding assets is a priority. For individuals entering into second marriages, protecting investments or previous family homes for their existing children is a major consideration. In these cases, it’s common for couples to keep ownership of such properties separate to ensure they are inherited by their respective children rather than being factored into the new marital union.

When it comes to purchasing new marital homes, couples often enter the property market with clear financial agreements in place. These agreements ensure that the financial contributions of both partners are explicitly recognised, adequately reflect the financial realities and priorities of their second union and ensure that the new home is equitably shared. In the context of mortgages and property ownership, the importance of effective financial planning and communication when blending households in second marriages can’t be understated.

Appetite for new builds remains dampened

The appetite for new builds in Australia continues to be subdued primarily due to a variety of factors that have left many prospective homeowners cautious about embarking on new construction projects. With construction companies folding left, right, and centre, potential homeowners are understandably apprehensive about building their new home.

With uncertain timelines, cost overruns due to the rising price of building materials, and labour shortages to contend with, many Aussies are instead opting for existing properties or considering alternative measures like renovating as a more secure and predictable pathway to homeownership.

Residential construction rates will remain low in 2024.

Cash is king

Whether they accumulated cash through savings during the pandemic or are sitting on extra dough through the sales of investment properties, an increasing number of Australians are poised to buy into the market in cash. Data shows that 1 in 4 property purchases in Australia’s three most populous states are cash purchases.

Undeterred by high interest rates, these buyers are a formidable force in the property market. Consisting of downsizing Boomers and international buyers, this cohort could potentially price out buyers who rely on mortgage financing, intensifying competition for the most desirable properties and possibly driving property prices even higher.

Mortgage sideliners

A growing group of individuals often referred to as “mortgage sideliners” are sitting in the wings for longer and longer as they await more favourable market conditions. For these potential homebuyers the increasing unaffordability of homes coupled with tighter lending requirements is a major barrier to entry. Mortgage sideliners hope for a market correction and for interest rates to fall before making their move. While they continue to monitor the market for the right opportunity, mortgage sideliners risk the current market spiralling even further out of reach as a low interest rate period is sure to spark more competition for desirable properties.

Two Red Shoes founder Rebecca Jarrett-Dalton

Rebecca Jarrett-Dalton is founder of mortgage broker, Two Red Shoes

Ben Broca launched a company last December that offers AI tools to entrepreneurs. He’s already added 10,000 paying customers and is on track to bring in $10 million in revenue this year.

One thing he hasn’t added: any other employees.

The 40-year-old is part of a class of entrepreneurs who are launching, and then often running, new companies on their own. Artificial intelligence tools answer Broca’s emails, help write and debug code, field requests from customers, sign up new subscribers and grant refunds when issues arise.

Broca relishes his ability to make whatever decisions he wants on his own, often from his sun-drenched Sausalito, Calif., living room. “I think compromises make lukewarm results,” he said.

Once upon a time, running a business of a certain size required a team. AI is turning that assumption upside down, and more aspiring entrepreneurs are going it alone.

Ben Broca sitting in his home office. — Tech has seen an explosion of solo founders in the past year. Broca said he likes being able to work at his own speed, unencumbered by a team. Jonah Reenders for WSJ

An analysis by the payments company Stripe shows there are thousands of solo operators on the company’s platform that are generating over $1 million in revenue, with their ranks doubling between 2023 and 2025. The number of solo operators crossing the $10 million threshold nearly tripled in that same span.

In the past, people without business contacts or particular savvy might not have known how to get their ideas off the ground, said Ernie Tedeschi, Stripe’s chief economist. “Now, AI can be a built-in business partner,” he said.

AI’s ability to handle various administrative tasks makes it potentially useful for launching solo businesses in many fields. But the technology’s ability to also handle key tasks in tech, like coding, make that field a particular hot spot.

Analyzing Census Bureau data, Bank of America Institute economist Taylor Bowley found that among all industries, new business applications in the information sector have seen the biggest percentage increase—nearly 45%—over the past year. At the same time, the rate of information-sector applicants saying they plan to hire workers has experienced the sharpest decline of any measured industry.

This Census dataset doesn’t track solo-operated businesses. But the numbers broadly show—in tech and beyond—that applications are flat among businesses likely to hire workers, but generally rising elsewhere. Economists say that’s a strong sign that solo operators are on the upswing.

“The bar for getting started has never been lower,” said Julian Weisser, who runs a San Francisco-based accelerator for solo founders working in tech. The accelerator—which offers founders seed money and mentorship in exchange for an equity stake—attracted 4,500 applicants for 10 slots made available in its most recent cycle, nearly five times the number it drew when it launched last May.

Going it alone with AI can still be surprisingly expensive. Broca said he was losing money on many customers’ accounts while paying to access Anthropic’s Claude to run his clients’ requests—that AI company, as well as others, charges based on usage. He has since switched to free open-source AI models from China.

Broca said he has raised $30 million from investors and, at the same time, has saved millions in salary since he hasn’t needed a team of software engineers.

Another risk: If it’s easy for one entrepreneur to launch an AI-assisted business, copying them can be easy, too. This creates anxiety for founders like Troy Johnston, who runs an AI-assisted business alone in Orlando, Fla.

“Everybody has the sword and we all have the ability to unsheathe Excalibur now,” said Johnston, 40, who used AI to code an app that helps people get the most out of credit card benefits. The company makes around $3,000 a month in profit, with no employees, and is continuing to grow.

Troy Johnston said AI’s power and ease of use is an incredible boon for entrepreneurs like him—and also a double-edged sword. Luann Koerper

What one-person businesses will mean for the labor market remains to be seen. Polling has shown Americans are worried that AI will replace jobs, and top economists are wrestling with that possibility, too. But AI is also creating lots of new jobs, and the go-it-alone entrepreneurs show how the technology can both open doors and limit employment opportunities.

“If everyone’s hiring less, but you get four times more firms, what does that do to head count?” said Rembrand Koning, an associate professor at Harvard Business School who studies entrepreneurship. He co-authored a recent study that found that among 50,000 startups the researchers examined, those focused on AI tended to operate with 25% fewer employees.

Koning also believes a soft hiring environment that’s left some people mired in long job searches has encouraged more to try their hand at launching businesses.

Some founders cite different motives. “It’s a perfect storm of post-pandemic burnout and a re-evaluation of one’s priorities, and also booming AI and a sense of what’s possible,” said Samir Ahmad, 39, who lives in Breinigsville, Pa.

Two years ago, Ahmad decided to leave the corporate job he had worked at Verizon for almost two decades to start a solo coaching and consulting business. He had been seeing social-media posts touting the ease and virtues of AI, which he used to chart a business plan and help with marketing. “It was like my chief of staff, a second in command,” he said.

The business ultimately petered out within months, though, and Ahmad is now back to a full-time corporate role with a utility company.

For Claire Vo, 41, AI helped her turn a passing impulse into a business. She was working full-time as a tech executive when she tapped AI in late 2023 to help code an app that would help her manage documentation and design for new products, with customers ranging from financial services to healthcare firms.

“I was copying and pasting from ChatGPT,” said Vo, who lives in San Francisco.

Claire Vo smiling into the camera while recording a podcast. — Claire Vo used AI to code an app that’s on track to make seven figures in profit this year. Claire Vo

She put the app online for $1 a month, and within weeks people downloaded it thousands of times. Nearly three years later, Vo’s company—which she ran solo for nine months before hiring an engineer—now has 100,000 users and is on track to make seven figures in profit this year. AI handles the company’s marketing, sales and customer support.

While AI is a shortcut, Vo said her network and credibility in the industry were key. “I think people over-index on how easy AI is and under-index on how much I did to get to this point,” she said.