As we navigate through 2024, the Australian property and finance landscape is teeming with opportunities and significant markers that prospective property buyers should heed. With a mix of economic signals, policy changes, and seasonal trends, the year ahead presents a compelling case for entering the property market sooner rather than later. Let's delve into the factors that could drive property prices higher across Australia and why acting now might be the wise choice for those looking to invest in property.
Decline in building approvals signals tighter supply
A significant drop in building approvals, with a -9% year-on-year decrease, highlights a tightening in the supply of new housing. This constriction is not a temporary blip but a trend that signals the scarcity of newly built homes entering the market. With fewer new developments on the horizon, the demand for existing properties is set to intensify. For buyers, this means that the current period may offer a unique window to secure properties before the scarcity drives prices up further.
The Year Ahead : Property and Finance timeline for 2024
Impact of Rising Immigration on Australia's Housing and Rental Markets
As Australia prepares for a significant uptick in immigration, with over 190,000 places set to be filled, the impact on the housing market—especially in major cities where newcomers predominantly settle—will be pronounced. This surge not only boosts overall demand for housing but also notably intensifies pressure on the rental market.
Immigrants typically gravitate towards metropolitan areas like Sydney, Melbourne, and Brisbane, seeking the extensive amenities, employment opportunities, and community networks these cities offer. This influx creates a robust demand for residential properties, particularly rentals, as many newcomers initially opt to rent upon their arrival. The increasing demand, coupled with already limited rental supply, exacerbates the strain on the rental housing market, driving up lease prices and decreasing vacancy rates.
“The increasing demand, coupled with already limited rental supply, exacerbates the strain on the rental housing market, driving up lease prices and decreasing vacancy rates.”
For potential buyers, particularly those eyeing property in these urban centres, the increased competition and escalating rental costs mean that entering the market sooner could be a strategic move. Securing a property now could not only provide a hedge against rising rental costs but also position property owners to benefit from appreciating values and strong rental yields as demand continues to outpace supply. This scenario underscores the critical window of opportunity in 2024 for buyers ready to invest in the dynamic Australian property landscape.
RBA Cash Rate movements and speculations
The Reserve Bank of Australia (RBA) plays a pivotal role in shaping the property market through its control over the cash rate. Speculation abounds that the RBA may cut the cash rate towards the end of 2024 or early 2025. Such a move would likely spur a surge in property market interest, as lower interest rates make home loan borrowing more attractive. However, even if the RBA opts to hold the rate, the resulting stability is itself a green light for buyers and investors. The schedule for the RBA board meetings, where these critical decisions are made, is particularly important for market watchers. Notably, the next meeting is slated for 6-7 May 2024, with the decision announced on the second day. Such meetings are key watch points for anyone looking to time their market entry.
RBA interest rates calendar for 2024
5 - 6 February
18 - 19 March
6 - 7 May
17 - 18 June
5 - 6 August
23 - 24 September
4 - 5 November
9 - 10 December
Keeping an eye on these dates can provide investors with insight into potential market movements and timing their investments accordingly.
Tax strategies and End-of-Financial-Year
The end of the financial year on 30 June 2024 is another period to watch. It often triggers a buying frenzy as buyers and vendors align their property transactions with their tax strategies. For some, buying or selling before the financial year-end can offer significant tax advantages, influencing the timing of their decisions. This seasonal trend can create unique opportunities for astute buyers ready to act, so it’s always good to speak with an experienced mortgage broker who can liaise with your accountant to find the most suitable investment loan.
Government incentives for First Home Buyers
Adding to the reasons for optimism is the Australian government's release of 35,000 new places in the first home buyer 5% deposit scheme starting 1 July 2024. This continued initiative makes homeownership more accessible for first-time buyers, potentially increasing demand as more people are enabled to enter the market. For sellers, this means a larger pool of potential buyers. For buyers, it's an opportunity to leverage government support to secure a home with a lower initial outlay.
Seasonal trends: Spring buying season and November demand
The property market also follows seasonal trends that influence buyer behaviour. The spring buying season, kicking off in September, sees a spike in properties hitting the market. Warmer weather encourages more buyers to come out, driving competition and potentially pushing prices up. Similarly, November emerges as the prime buying month for those wishing to move into their new home before Christmas. This deadline drives a concentrated burst of activity, making it a critical time for buyers ready to make their move.
In light of these factors, the year ahead presents a nuanced but ultimately encouraging picture for prospective property buyers in Australia. The confluence of a tighter housing supply, potential RBA rate cuts, strategic financial year-end buying, government incentives for first-time buyers, and seasonal buying trends, all signal a market ripe with opportunities. For those considering entering the property market, the coming months may offer the best chance to secure a valuable investment before the anticipated upswing in prices. Acting now, with an eye on the economic and seasonal indicators, could position new homeowners and investors alike for significant gains in the ever-evolving Australian property landscape.