Greener Homes, Living Alone And Ongoing Rate Pain

Ray White’s chief economist, Nerida Conisbee says property price growth will continue next year and mortgage holders will need to “survive until 2025” amid expectations of higher interest rates for longer.

Ms Conisbee said strong population growth and a housing supply shortage combatted the impact of rising interest rates in 2023, leading to unusually strong price growth during a rate hiking cycle. The latest CoreLogic data shows home values have increased by more than 10 percent in the year to date in Sydney, Brisbane and Perth. Among the regional markets, price growth has been strongest in regional South Australia with 8.6 percent growth and regional Queensland at 6.9 percent growth.

“As interest rates head close to peak, it is expected that price growth will continue. At this point, housing supply remains extremely low and many people that would be new home buyers are being pushed into the established market,” Ms Conisbee said. “Big jumps in rents are pushing more first home buyers into the market and population growth is continuing to be strong.”

Ms Conisbee said interest rates will be higher for longer due to sticky inflation. “… we are unlikely to see a rate cut until late 2024 or early 2025. This means mortgage holders need to survive until 2025, paying far more on their home loans than they did two years ago.”

Buyers in coastal areas currently have a window of opportunity to take advantage of softer prices, Ms Conisbee said. “Look out for beach house bargains over summer but you need to move quick. In many beachside holiday destinations, we saw a sharp rise in properties for sale and a corresponding fall in prices. This was driven by many pandemic driven holiday home purchases coming back on to the market.”

3 key housing market trends for 2024

Here are three of Ms Conisbee’s predictions for the key housing market trends of 2024.

Luxury apartment market to soar

Ms Conisbee said the types of apartments being built have changed dramatically amid more people choosing to live in apartments longer-term and Australia’s ageing population downsizing. “Demand is increasing for much larger, higher quality, more expensive developments. This has resulted in the most expensive apartments in Australia seeing price increases more than double those of an average priced apartment. This year, fewer apartments being built, growing population and a desire to live in some of Australia’s most sought-after inner urban areas will lead to a boom in luxury apartment demand.”

Homes to become even greener

The rising costs of energy and the health impacts of heat are two new factors driving interest in green homes, Ms Conisbee said. “Having a greener home utilising solar and batteries makes it cheaper to run air conditioning, heaters and pool pumps. We are heading into a particularly hot summer and having homes that are difficult to cool down makes them far more dangerous for the elderly and very young.”

More people living alone

For some time now, long-term social changes such as delayed marriage and an ageing population have led to more people living alone. However, Ms Conisbee points out that the pandemic also showed that many people prefer to live alone for lifestyle reasons. “Shorter term, the pandemic has shown that given the chance, many people prefer to live alone with a record increase in single-person households during the time. This trend may influence housing preferences, with a potential rise in demand for smaller dwellings and properties catering to individuals rather than traditional family units.”

Melbourne is poised to become Australia’s largest city within the next decade, with strong population growth, infrastructure investment and relative affordability driving long-term property demand.

A new research report from Knight Frank argues the Victorian capital remains one of the country’s most compelling markets for investors, businesses and residents.

The report highlights the city’s rapidly expanding population, diverse economy and major infrastructure pipeline as key factors underpinning future property growth.

Knight Frank Managing Director Victoria, Dominic Long, said Melbourne’s fundamentals continue to position the city strongly for long-term investment.

“Melbourne continues to stand out as one of Australia’s most compelling real estate markets,” he said.

“It is Australia’s strongest long-term growth city with the fastest growing population, the most diversified economy, world-class liveability and the most affordable major market for office, industrial and residential property.”

Population growth driving demand

Melbourne’s population has grown at an average rate of 1.8 per cent per year since 2000, faster than any advanced global economy, according to the research.

In the year to June 2025 alone, the city added about 123,500 residents, the largest annual increase of any Australian capital.

Population growth is expected to remain one of the key drivers of demand across residential and commercial property markets, including housing, offices and logistics space.

The report forecasts Melbourne’s population will overtake Sydney’s by the 2030s, reinforcing its position as the country’s fastest-growing major city.

Office market offering value

Melbourne’s CBD office market is also attracting renewed attention from investors.

Prime office rents remain significantly lower than in competing cities, with CBD office space about 46 per cent cheaper than Sydney and around 13 per cent cheaper than Brisbane.

That relative affordability is expected to drive long-term demand from occupiers and investors seeking value in Australia’s largest office markets.

The city’s office sector is also showing signs of recovery, with effective rents rising in 2025 and demand increasing for high-quality buildings in premium locations.

Industrial market benefiting from scale

Melbourne’s industrial sector continues to expand, supported by strong population growth, e-commerce demand and the scale of the city’s logistics network.

The city already hosts the country’s largest industrial market, with about 34 million square metres of warehousing stock and significant land available for future development.

Industrial rents remain competitive compared with other capitals, while Melbourne’s port handles the largest container volumes in Australia, further supporting demand for logistics space.

Infrastructure pipeline supporting growth

More than $200 billion in transport infrastructure investment between 2014 and 2036 is also expected to reshape the city and support future property values.

Major projects include the Metro Tunnel, the West Gate Tunnel, the North-East Link and the Suburban Rail Loop, which together will improve connectivity across Melbourne and its growth corridors.

Knight Frank’s Head of Research & Consulting, Victoria, Dr Tony McGough, said these investments would play a key role in supporting the city’s economic expansion.

“Melbourne is Australia’s most economically diverse city and has delivered stable growth for more than two decades,” he said.

“With strong population growth, a highly educated workforce and unprecedented infrastructure investment, Melbourne is well placed to remain one of Australia’s most attractive long-term property markets.”