2023 In Review, What To Expect From 2024
It’s hard to believe that it’s almost the end of the year, and what a year it’s been in the property world!
Let’s take a look at some of the highs and lows of 2023, and what we can expect to see in 2024.
Looking back on 2023
Interest rates climbed and then plateaued
From May 2022, the Reserve Bank of Australia (RBA) began an aggressive cycle of tightening the cash rate in order to get inflation under control.
In 2023, we saw the RBA lift the cash rate in February, March, May, June and November, leaving mortgage holders grappling with rising repayments and cost-of-living pressures.
This month, the cash rate has remained on hold at 4.35% as the RBA assesses the impact of the increased interest rates and the economic outlook.
The RBA went under the microscope
In April 2023, Treasurer Jim Chalmers released the findings of the Review of the Reserve Bank. It was the first external review of Australia’s central bank in four decades.
Some of the key recommendations included:
The RBA should have a ‘monetary policy board’ with greater economic expertise and shift to eight meetings a year (instead of 11) to allow more time to consider issues.
There should be a press conference after each meeting to encourage more transparency, and board members should speak publicly about the board’s work.
Two separate boards should be established – one for monetary policy, the other for governance of the RBA.
The inflation target of two to three per cent should be retained.
There should be five-yearly reviews of the RBA’s monetary policy framework and policy tools.
Meanwhile, Michele Bullock was appointed as the RBA’s first female Governor, taking over from Philip Lowe on September 18. She said her priority was to develop a “culture of sharing, debate and respectful challenge” inside the bank.
Property prices rebounded in many markets
In good news for homeowners, property prices climbed in many markets in 2023.
Despite rising interest rates, we saw a 2.3% increase in property prices over the first six months of 2023, and the upwards trend continued in the second half of the year.
A lack of supply of available properties was one of the main driving factors propping up property price growth.
Rents skyrocketed
Rents across Australia rose at a rapid pace in 2023, with landlords hiking rents to cover rising mortgage repayments.
Limited rental supply added fuel to the fire, set against the backdrop of a surge in Australia’s migrant population growth.
What’s ahead in 2024
Interest rates may drop
All four of the Big Banks are predicting the cash rate will drop in 2024.
Commonwealth Bank expects a cash rate drop as early as March, while NAB is anticipating the RBA will cut the cash rate in August. Westpac believes the RBA will lower rates in September and December. ANZ anticipates a cash rate drop towards the end of 2024.
The RBA will have a shake up
Treasurer Jim Chalmers and RBA Governor Michele Bullock are working through the details, but we will likely see some of the recommendations of the RBA review implemented in 2024.
Former governor Philip Lowe in July committed to cutting the number of board meetings to eight from 11 from next February.
For borrowers, that means there will be more time between decisions for borrowers to adjust to any changes in the cash rate.
Property prices may continue to climb
The property price rebound looks set to continue into 2024.
According to the Domain Forecast Report Financial Year 2023-24, house prices in Sydney, Adelaide, and Perth, and unit prices in Brisbane, Adelaide and Hobart, could have fully recovered from the 2022 downturn by the end of this financial year. Sydney is expected to lead the way, with house prices rising 6% to 9% by the end of June 2024.
Rental growth may slow
It may not be great news for investors, but renters will be happy to know that rental growth may slow in 2024. There are a number of reasons for this, according to CoreLogic Head of Research Eliza Owen.
For one, rents move with interest rates, and interest rates could fall next year.
Housing preferences could also change, with people moving to share houses as income growth softens and rents become less affordable.
Planning a 2024 property purchase?
With interest rates expected to come down and property prices on the rise, 2024 is shaping up to be an exciting year for property owners.
If you’re planning a property purchase, talk to us about getting pre-approved on your finance, so that you’re ready to dive in when you find the right property