Sydney and Melbourne house prices to dip in 2024

Perth and Brisbane to buck the trend

Sydney and Melbourne house prices to dip in 2024


By Mina Martin

Sydney and Melbourne dwelling prices will likely moderately decline next year, forming part of what is expected to be a mixed 2024 national housing market, SQM Research has predicted in its annual update.

In its Christopher’s Housing Boom and Bust Report 2024, SQM Research indicated a base case forecast for average national dwelling prices to range between -1% and 3%, with Perth and Brisbane anticipated to buck the overall trend.

Both cities are expected to experience price rises – a positive outlook attributed to a recovering Chinese economy, driving strong demand for base commodities like iron ore.

However, in many other parts of Australia, the substantial decline in housing affordability, driven by ongoing interest rate hikes that SQM considers to have reached restrictive levels, along with an anticipated economic slowdown, is projected to lead to a modest to moderate correction in dwelling prices in Sydney, Melbourne, Canberra, and Hobart.

Meanwhile, Adelaide and Darwin are expected to remain relatively stable or experience a minor rise/correction.

Sydney, Melbourne, and Canberra dwelling prices

In Sydney, dwelling prices are expected to experience a moderate fall, ranging from -4% to 0%. Middle to outer rings for free-standing houses in Sydney are projected to see a more substantial correction, while units are expected to outperform. The city’s inner ring, meanwhile, is anticipated to continue experiencing price rises, driven by sustained demand from foreign investors seeking top-end properties.

Melbourne is also forecast to see a modest correction, with prices anticipated to fall by up to 3%. Similar to Sydney, the top end of the market in Melbourne is expected to see price rises, and units, too, will likely outperform.

For Canberra, the report forecasts the largest fall among all cities, with price declines expected to range between 4% to 8%. This is attributed to slower anticipated federal government spending and an expected surge in dwelling completions.

“Another year of anticipated strong population expansion (albeit slower than 2023) plus an ongoing shortage of new dwellings, will limit the fall in housing prices to single percentage digits and the price falls should just be limited to mainly Sydney, Melbourne, Canberra, and Hobart, said Louis Christopher (pictured above), managing director of SQM Research.

“Nevertheless, 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.”

Impact of interest rate hikes

The cumulative effect of interest rate increases over 2022, 2023, and potentially into 2024 is expected to impact homeowners and prospective buyers. SQM Research anticipates a rise in distressed selling activity over the next year, with only the most cashed-up would-be buyers entering the housing market.

“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,” Christopher said.

Expectations of rising rents

Anticipating a decline in population growth and a sharp decrease in dwelling completions in 2024, SQM Research predicts a nationwide increase in asking rents. Rental rates are expected to rise between 7% to 10%, with Perth projected to record the most significant increase of 12% to 15%.

For the full report, visit the SQM Research website.

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