Preeminent Expert Reveals 2024 Housing Market Predictions

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.

Looking to build, or renovate, a home in 2024? You’re not alone. According to a recent study from Resolve Finance, over a third of Australian homeowners are planning to renovate their current properties in the next 12 months. And if the Federal Government achieves its ambitious goal of delivering 1.2 million new dwellings over the next five years, there will be many new home owners looking to build their dream home in 2024 and beyond.

But before tackling such a behemoth task, considering all the latest—and future—architectural trends is pivotal in your new build’s success. Award-winning architect and interior designer, Georgina Wilson said sustainability will be at the forefront for many interested in energy efficiency and saving money on power bills.

“Elements of passive design are moving into the mainstream. Improvements in the technology with double glazing, building wrapping and insulation are meaning that more people have access to these materials,” Ms Wilson said. “Solar has proven itself and homeowners are now looking for other ways to make their home more efficient.”

The following eight trends reflect a growing emphasis on sustainability, flexibility, and wellbeing in residential architecture, catering to the evolving needs and preferences of homeowners in 2024.

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1). Consider your colour palette

The colours you use say everything about the type of spaces you want to foster, whether they be bright and warm, dark and moody, neutral — the list goes on. If we’re looking to trends, earthy, calming neutrals are in — think brown, beige and eucalyptus green. Colours that feel natural and soft, but welcoming provide an inviting environment that’s easy to live with.

However, interior designer and stylist, Jono Fleming said contrast is important to create interest and one of the most powerful ways to do this is through colour.

“It doesn’t have to be a big splash of colour, it could be introduced through smaller decorative objects, a statement furniture piece or an artwork, but the colour should add balance to the space,” he said.

2). Modern, outdoor living areas

Ever since the COVID pandemic and subsequent lockdowns, expanding living spaces to the outdoors has gained in popularity. Features like plant-filled front porches, outdoor kitchens, fire pits, and cosy seating areas create inviting spaces for relaxation and entertainment for all family members.

“There has definitely been a greater appreciation for outdoor living spaces since COVID,” said Ms Wilson. “Outdoor fabrics and mechanisms for shading have greatly improved in recent years allowing people to fully embrace seamless indoor/outdoor living.”

3). The integration of smart technology

Integrating smart home technology throughout your home continues to gain traction with homeowners. As we increasingly look to rely on technology to make our lives all the more seamless, smart technology throughout allows homeowners to control a variety of tasks and zones remotely, enhancing convenience, security, and even energy efficiency. This can include controlled heating and cooling from your phone, automatic lightning, voice control commands, and more.

“The technology for seamless appliances has come a long way. At Salone del Mobile Milano this year, we experienced the new Gaggenau fully integrated induction bench top, which in terms of kitchen design, is a huge advancement,” said Ms Wilson.

Gaggenau, the German manufacturer of high-end home appliances, is at the forefront of smart home technology, paving the way for intelligent cooking appliances that learn and adapt to user preferences. Gaggenau’s essential induction cooktop, the functional and seamless cooking surface Ms Wilson speaks of (pictured below), is designed to be “seamlessly integrated into a kitchen’s worktop”.

4). Health and wellness features

Prioritising health and wellness in 2024 is paramount, and home design that can include features like air purification systems, dedicated exercise spaces, recovering hubs—like saunas and ice baths—and relaxation areas to support physical and mental wellbeing will go a long way in not only adding value to your home, but providing a space that is architecturally on-trend and with the times.

“I’m seeing a lot of demand for in-built saunas, both traditional and infrared, particularly in the homes of our US clients,” said Ms Wilson.

“Bathroom suppliers such as Kohler, Duravit and Toto are offering increasingly sophisticated products that incorporate an almost spa-like experience in your at home bathroom. Examples of this are fantastic multi-nozzle showers and steam showers, Japanese toilets incorporating bidet technology, and elegant and serene bathroom furniture that can be fully customised for clients.”

5). Sustainability is key

A common goal among homeowners and future buyers alike is to own a property that is flexible enough grow with them. Futureproofing your home with sustainable measures will not only ensure its longevity, but it will help homeowners to play their part in addressing their carbon footprint.

“The current cost of living crisis is leading to a lot more multigenerational living, meaning families are prioritising durable materials and sustainable power sources, like solar,” said Ms Wilson.

Consider adding solar panels to your home, utilising sustainable materials in any upcoming renovations or builds, like recycled timber, and utilising energy-efficient lighting throughout your home.

6). Minimalist design

Do as the Scandinavians do – introduce minimalist design into your home. Embrace simplicity and clean lines with a focus on interior design. Decluttering in main living spaces is surprisingly effective. Adopting the approach of ‘Swedish Death Cleaning’, which essentially involves slowly ridding your house of unwanted or unused items once you reach the other side of 50, will also help you whittle your possessions down to the beautiful and the necessary.

Minimalist design in home appliances is also making a resurgence in 2024 according to Ms Wilson.

“What I’ve been interested to see at Salone del Mobile Milano in 2024 is a huge return to stainless steel finishes, and more and more seamless integration of appliances,” said Ms Wilson.

“We’re seeing timeless materials in reimagined applications: copper baths and stainless steel basins are emerging trends with the potential to be timeless. These materials are so practical, and pair beautifully with natural stone and timbers.”

Above all, maximising different spaces through efficient and effective storage options will also do wonders in achieving that minimal aesthetic.

7). Multifunctional spaces

As we move towards greater efficiency of space, it’s useful to consider multifunctional spaces throughout your home. In 2024, we are seeing more homes incorporate multifunctional spaces and trends. This includes using multifunctional furniture in main bedrooms or living spaces—furniture that can act as storage ottomans or convertible sofa beds—as well as transforming wasted space, and open up indoor to outdoor living.

“Multifunctional spaces in homes are a great idea. Particularly in small homes, it makes a lot of sense to achieve maximum value out of the limited space available. The way you use a space can change as your family evolves over time, so it’s always good to design in such a way that allows for flexibility,” said Ms Wilson.

“Make sure that the functions you allocate to a single room are compatible with the space available and each other. For example, it works really well to combine a living room, a dining room and a kitchen in one open plan space because these are all public, lively spaces. It doesn’t work very well to combine, say a study, with these spaces because you will want control over the visual and acoustic privacy in a study.”

8). Think about biophilic design

A buzz word among architects and interior designers, biophilic design is one of the strongest trends in 2024 thanks to its benefits in garnering a sense of harmony and connection between your home and the environment. Consider incorporating natural elements into home design, such as large windows to maximise natural light, indoor gardens, and natural materials like wood and stone.

“Biophilic design is a timeless principle, in that home design should connect people in a positive way with their natural environment by maximising access to, and the ability to control, natural light and ventilation, which really helps to create an enjoyable (and healthier) environment to live in,” said Ms Wilson.

“Increasingly, there is a demand for this positive relationship to the natural environment; by leaning on the principles of biophilic design, you can create a haven and retreat at home that can help with the daily stresses of life.”

Ways to foster that indoor-outdoor connection can be through the addition of smaller internal courtyard spaces filled with greenery, or incorporating indoor plants and adding greenery into different rooms throughout your home.

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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

Futureproof your home and maximise your return with design directions that focus on contemporary ways of living