What key factors will influence the housing market in 2024?

Bridging the sentiment divide between consumers and industry professionals

What key factors will influence the housing market in 2024?


By Ryan Johnson

According to a recent CoreLogic survey, a significant majority of real estate professionals (71%) anticipate that interest rates will wield the greatest influence over the housing market in 2024.

Among those surveyed, 59% expressed concerns that a potential rise in interest rates could negatively impact the market, while 12% held the belief that falling interest rates might stimulate market activity.

Interestingly, 15% of respondents highlighted increasing migration and population growth as a factor influencing prices.

Matt Chamberlain (pictured above left), real estate expert and director of buyers agency Chamberlain Brown Property Acquisitions, emphasised the pivotal role of interest rate stability in shaping buyer behaviour.

“Interest rates play a large role in the housing market for a lot of reasons; however, I don't believe it's interest rates themselves that directly impact the market. It's how changes in interest rates influence people’s decisions,” Chamberlain, who is also the host and founder of financial literacy podcast Millennial Wealth.

“For example, across the latest hiking cycle, a significant number of potential purchasers remained hesitant due to uncertainty surrounding interest rate movements.”

Home values expected to rise

The results from the Decoding 2024: Real estate's trends and goals survey were relatively in line with where housing market performance is currently forecast by the major banks, according to Eliza Owen (pictured above centre), CoreLogic head of residential research Australia.

Owen said the general expectation for housing values in 2024 was that the market would still grow but at a slower rate than the 8.1% observed in CoreLogic's Home Value Index in 2023.  However, others have disagreed, opting for more optimistic forecasts.

While the housing growth upswing has carried into the first month of 2024 with national dwelling values rising 0.4%, Owen expected this to slow higher cost of living pressures, a higher tax take from bracket creep, and high interest rates.

“This means less savings to put toward housing purchases – indeed the latest national accounts data from the ABS showed the household savings ratio had fallen to its lowest level since 2007,” Owen said.

Consumer sentiment

Amid numerous uncertainties and dwindling savings reserves, consumer sentiment has stayed subdued in early 2024.

ANZ-Roy Morgan Consumer Confidence dropped 1.9 points to 82.5 this week after the Albanese government broke an election promise and vowed to change the long-awaited Stage 3 tax cuts.

Where anything above 100 points is consider positive, consumer confidence dropped to its lowest so far in 2024 on January 30, and has now spent a record 52 straight weeks below the mark of 85.

This low sentiment may also indicate that households are reluctant to make significant, high-cost commitments, according to Owen.

Chamberlain suggested that focusing on the behavioural impact of interest rate movements might provide a clearer understanding of market dynamics than solely examining interest rates themselves.

However, he acknowledged that sentiment can quickly change.

With interest rates stabilising, many of these individuals are gaining confidence to re-enter the market,” said Chamberlain.

“It's less about the direct impact of interest rate fluctuations and more about the psychological impact of uncertainty or optimism on individual buyers."

Bridging the sentiment divide between consumers and industry professionals

The results from the CoreLogic Survey suggested others in the industry thought the same as Chamberlain despite interest rates and the current pessimistic consumer sentiment.

Nearly half (46%) of real estate professional respondents anticipate a rise in house prices this year of between 1-5%, while a further 13% expect an increase of more than 5%. One quarter (25%) believe prices will stay steady, with the remaining 16% predicting house price falls in 2024.

They also expressed confidence in the 2024 economy with nearly three in five (57%) respondents report a positive sentiment towards the overall Australian economy and expect business to benefit from some economic growth in 2024.

Contrastingly, the ANZ-Roy Morgan Consumer Sentiment survey found only 9% (down 1ppt) of Australians expect ‘good times’ for the Australian economy over the next 12 months compared to nearly a third, 31% (down 2ppts), that expect ‘bad times’.

Perhaps indicating how the industry plans to guide consumers through the turbulent conditions ahead, Dirk Miller (pictured above right), CoreLogic general manager of real estate solutions, said the CoreLogic survey results found deepening customer relationships was weighing on the minds of industry professionals.

“This will make smart prospecting, maximising the untapped potential of their databases and building a stronger brand pivotal to success through 2024 and beyond,” Miller said.

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