This article is from the Australian Property Journal archive
THE majority of real estate professionals are forecasting interest rate changes to have the most influential impact on the housing market this year.
According to a new survey by CoreLogic, 71% or real estate professionals named fluctuations in interest rates as the primary driver of the Australian real estate market in 2024, with 59% expecting rising rates to have the greatest influence and 12% expecting falling rates to bring on some change.
The majority of respondents expressed a positive sentiment toward the overall economy for 2024, with 57% expecting some economic growth and while 59% forecasting a rise in home values.
“The broad expectation for housing values in 2024 is that the market will still grow but at a slower rate than the 8.1% observed in CoreLogic’s Home Value Index in 2023,” Eliza Owen, head of residential research at CoreLogic, Australia.
“Growth in housing demand is expected to slow amid 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. Consumer sentiment remained very low at the start of 2024, which can also signal households being hesitant to make high-cost, high-commitment decisions.”
46% of respondents predict a rise in house prices between 1-5%, while 13% anticipate a rise exceeding 5%.
On the other hand, 25% believe prices will remain steady, with 16% forecasting a decline in house prices this year.
“Despite some of the headwinds for market demand, growth is still expected to be positive throughout 2024. Ongoing constraints in the construction sector are likely to keep a floor under home values, with the number of completions trending lower throughout 2023,” added Owen.
“There remains a strong mismatch in the supply and demand of dwellings across Australia, and anything that makes buying more accessible, such as a reduction in interest rates, would likely boost buyer numbers. With inflation currently trending just below RBA forecasts, the case for a cash rate reduction is firming up in 2024.”
At the local level, 41% named low housing stock as the most significant stressor agencies for the year, with 38% naming high interest rates and inflation.
“Our survey respondents from across the real estate industry indicate confidence about house price increases and 2024 economic growth stimulating business in the long run, despite having strong concerns about interest rate fluctuations shaping this year’s market,” said Dirk Miller, general manager of real estate solutions at CoreLogic.
“The results also found low levels of stock and deepening customer relationships are also weighing on their minds. This will make smart prospecting, maximising the untapped potential of their databases and building a stronger brand pivotal to success through 2024 and beyond.”
80% named increasing face-to-face interactions with customers as key for success.
While the top strategy for bringing in new business for 49% of respondents was to nurture their CRM database through emails, SMS and calls.
With 67% of respondents named better utilising their CRM data as a priority in 2024.
