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[NEW VIDEO]: The Melbourne Property Market Update June 2024

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Australia’s wealth is highly concentrated in our housing market. The total value of the nation’s residential housing stock hit $10.4 trillion in late 2023, according to the Australian Bureau of Statistics (ABS).

Broadly speaking, the property market has recovered from the downturn in prices of 2022. Despite a series of interest rate hikes taking the cash rate to a decade high of 4.35 per cent, property prices across the nation surprisingly went up in 2023.

Alongside the constrained housing supply, economists say the strong demand for housing – fuelled by population growth – largely cushioned the housing market from the effects of higher interest rates and poor housing affordability.

Without knowing if the cash rate has peaked, or when it might come down, economists and experts are divided in their predictions for the property market in 2024 and beyond. 

Domain has predicted national house price rises of 5 to 7 per cent in 2024.

The median house price in Sydney is expected to rise by 7 to 9 per cent, in Brisbane and Adelaide by 7 to 8 per cent, and in Perth by 6 to 7 per cent.

In Canberra, a more modest rate of 3 to 5 per cent is forecast, while Melbourne and Hobart’s median is predicted to rise by 2 to 4 per cent.

A slash in interest rates would likely spark demand and activity in the housing market, said Domain chief of research and economics Dr Nicola Powell. 

“The interest rate cut is going to be one of those things that’ll probably help to change consumer sentiment,” she says. 

“Once we start to see interest rates being cut, it’ll feed into improved consumer sentiment, and once consumer sentiment starts to rise, we’ll likely see increased housing activity occur – and that is expected to happen in late 2024.”

Are house prices dropping in Victoria? 

Yes, but not by much. Melbourne’s median house price dropped 1.5 per cent over the first three months of 2024, falling to $1,032,000.

Prices have been basically stagnant for the past year, up by 0.7 per cent compared to the March quarter of 2023.

The city’s housing market peaked in 2021 when the median house price hit its record high of $1,094,000.

Meanwhile, Melbourne’s median unit price fell by 1.3 per cent over the latest quarter to $564,095. 

Along with high interest rates and reduced borrowing power, Dr Powell said negative net interstate migration and market weakness following Melbourne’s extended lockdowns had left its property market further behind than in other cities.

In regional Victoria, house prices in most council areas have taken a tumble in the past year, in some cases reversing the COVID-era gains.

What will houses be worth in 2030 in Australia? 

If only we knew! Even the most esteemed and knowledgable economists in the country have been wrong about house price predictions in recent years, so it would be nigh impossible to predict prices in 2030.

The housing market is influenced by a wide range of factors including global economics, geopolitics, and events such as wars or pandemics. The Australian political landscape also plays a significant role in house prices, with legislative changes and housing policies – such as stimulus packages for first-home buyers, or tax incentives for developers – all having an impact on supply and demand.

One of the main drivers of Australian property prices is the country’s housing shortage. Put simply, new home completions have failed to keep pace with population growth.

With the country’s population projected to increase by two million people by the end of this decade, the Labor government has announced its aim to build 1.2 million new homes by 2029. But experts believe it will likely still fall short of Australia’s housing needs.

Future lending conditions, inflation and interest rate rises or cuts will also impact property prices in the years to come.

A potential property bubble bursting in the Australian housing market has been hotly debated for many years, but fears or warnings of a looming “crash” have not come to fruition. House prices softened in 2022 after an enormous upswing following the pandemic, but the downturn was short-lived.

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