If 2023 proved anything, it proved that the Melbourne Metro property market was very resilient. In the face of continued interest rate rises (to a 12-year high) and an upward trend when it came to the cost of living throughout the city and suburbs, Melbourne property prices rose 3.5%. This was quite the rebound considering how much the market dipped the previous year, dropping 7.9% from March 2022 to January 2023.
So, what does 2024 have in store for buyers and sellers in Melbourne? While a whole new set of challenges lay ahead for the next year, many experts are predicting a positive outlook for the metro property market, with 2024 set to put a smile on the face of many Melburnians with grand real estate ambitions.
Relief ahead as the RBA set to lower rates
Only a few months ago, it was nigh impossible to get a consistent consensus from experts of when the Reserve Bank of Australia would begin to cut interest rates. And of course, getting any indication from the RBA themselves is akin to pulling teeth.
And while expert predictions do still vary, there seems to be a more consistent theory that the RBA will begin cuts from anywhere between June and September this year. AMP Chief Economist Shane Oliver predicts three interest rates cuts starting in June 2024, bringing the cash rate down to a more palatable 3.6% by the year’s end (currently at 4.35% as of January 2024).
“We expect a combination of falling December (2023) inflation data, weak December retail sales and a rising trend in unemployment to head off another rate hike in February,” Oliver noted in an article in Yahoo Finance. “By June, enough evidence of weak growth and falling inflation will have accumulated to enable the RBA to start cutting rates.”
Lower than expected inflation figures have also helped the cause when it comes to the potential of a rates slash, with inflation dropping to 4.3% by the end of November 2023 (The peak was a whopping 8.4% in December 2022). Even the drop from November 2023 was significant which saw the rate at 5.3%. Inflation still isn’t where the RBA wants, but it might be enough on the right track for them to begin the process of lowering rates.
Better than predicted results for 2023 and even rosier predictions for 2024!
The Melbourne property market is set to rise anywhere from 1 to 4% according to PropTrack’s Property Market Outlook Report. This would see the house value rise up to $37,000, bringing the median house price to close to $950,000. This would double the price rise that houses in Melbourne saw in 2023, and while the 2023 result may seem lackluster, the forecast for the housing market was a 7% decline.
Melbourne’s eastern suburbs were among the high flyers when it came to house median rises in 2023, with Murrumbeena and Mount Waverley leading the way with an annual rise of 13.2% and 11.1% respectively. Glen Waverley, Wantirna, Croydon South, Mont Albert, and Wheelers Hill were other suburbs rounding out the top ten, all enjoying double digit percentage rises.
Proptrack’s report does flag first home buyers across Australia as being in a tougher position to purchase their first property. However, Melbourne’s abundance of properties on the market (due to many factors including an exodus of investors selling their properties) as being in a positive place to land their very first home.
A market that is slowly swinging towards buyers
Through the first half of 2024, experts are predicting the market to be a bit more favourable to those looking to purchase. The shift happened towards the end of 2023, and was largely due to the abundance of properties on the market. The total number of homes listed for sale in Melbourne rose by 1.9% in November 2023, the biggest rise in listings in all capital cities according to SQM Research.
“I think buyers will have a six-month window, if you will, in the first half of 2024,” said Tim Lawless, Research Director of CoreLogic in an article in the Australian Financial Review. “Once we see interest rates coming down or even just the expectation that interest rates will be coming down, that should be reflected in a boost in consumer sentiment.”
Underperforming suburbs looking to rebound in 2024
Realestate.com.au has released its list of underperforming suburbs across Australia that are tipped for a strong rebound in 2024.
The list used data from PropTrack, with a strong measure being ‘enquiries per listing’ which combines high-intent actions such as emailing an enquiry, calling the agent, or downloading documents regarding a property. All these actions are a great indicator of which are the in-demand suburbs buyers should look at. “Enquiries are one of the components of demand, and we know that demand influences prices,” said Paul Ryan to Realestate.com.au, Senior Economist at PropTrack.
High on the list of suburbs set for a rebound in 2024 when it comes to houses include Melton, Campbellfield, Doveton, and Cairnlea. On the units and apartments side, Oakleigh, Patterson Lakes, Heidelberg West, and Pascoe Vale South are tipped to return to their former buoyant glory days.