Herron Todd White Property Clock February 2024
- Posted By Chris Nicholson
Herron Todd White (HTW) is the leading property valuers in the country. Each month they release a monthly update and property clock. This gives a fair idea as to what to expect from the property market in the coming months.
When looking for a reliable insight into the property market, HTW gives an unbiased review of the current state of the market and what to expect in the coming months. After all they are the finance valuers that determine if people get finance or not.
Here is the latest property clock and the Meridien view on what is happening in Australia’s property market. It has been long expected that some markets will decline but no one knew just how long this property boom would last, but as evident below it is clear that some markets are beginning to slow.
Victoria
Throughout 2023, Victoria's property market saw a general decline, although some areas remained stable or even experienced growth. This trend was largely influenced by a 1.25 percent increase in the national cash rate and persistently high inflation, with the lowest quarterly rate recorded at 5.4 percent, significantly above the target range of two to three percent.
Despite this slight downturn, the Victorian property market is expected to stabilise and potentially grow over the next year. Factors contributing to this outlook include continued immigration growth in Australia, forecasts for stabilising or decreasing interest rates, and incentives from both state and federal governments.
While land sales for new developments have decreased, there is optimism for improvement in 2024, particularly in Melbourne's outer growth suburbs, where demand for affordable housing is anticipated to rise.
By analysing the past year's trends, we can make informed predictions about the performance of Victoria's property market over the next 12 months.
Queensland
Brisbane's property values follow a consistent and predictable growth pattern, with inner-city suburbs typically leading the charge and gains spreading outward to more distant suburbs.
Several key factors contribute to this growth, including infrastructure spending, gentrification, facility upgrades, and population growth. These drivers are expected to continue influencing price increases and sales volumes in Brisbane throughout the year.
Taking a broad view of the city and its surrounding areas, it's likely that the market momentum seen in the latter part of 2023 will carry on into 2024, benefiting current property owners.
The trend of demand surpassing supply in Brisbane's property market is well established and shows no signs of slowing down.
Several factors contribute to this ongoing demand. A booming population, fuelled by a significant influx of interstate arrivals, is one major driver. Many people are drawn to Southeast Queensland for its lifestyle benefits and relatively affordable housing, making Brisbane a prime destination. Interstate buyers, particularly from New South Wales and Victoria, often sell their properties and relocate to Queensland, where they can purchase a comparable or superior home and still have substantial funds left over.
Brisbane already experiences higher population growth rates compared to other states and territories. When combined with the record numbers of overseas immigrants and returning expatriates coming to Australia, it's clear that the demand for housing in Brisbane will remain strong.
Western Australia
The Western Australian property market performed robustly in 2023, with residential properties in Perth experiencing a notable 12.76 percent increase in the median house price. Despite this growth, Perth remains the second most affordable capital city in Australia, behind Darwin.
Affordability continues to be a key feature of the Perth market, even amid economic uncertainties affecting lithium and nickel operations. The current demand in the market is expected to outweigh these uncertainties, maintaining an optimistic outlook for strong performance in 2024.
Although official interest rates significantly impacted consumer confidence throughout 2023, a probable pause in further rate increases introduces a positive outlook. Signs of stabilisation in core inflation late in 2023 suggest that the RBA may keep interest rates steady in 2024, providing property buyers and sellers with greater certainty regarding future affordability.
Real annual wage growth is projected for 2024, but its impact might be tempered by the delayed effects of past interest rate hikes. However, the relative affordability of housing in Western Australia is expected to mitigate this impact compared to the Eastern States.
Challenges in the construction industry are anticipated to persist into 2024. The exit of BGC from the housing construction market has created a significant void, and Perth has seen the highest nationwide increase in input prices for dwelling construction. While there are signs of relief with some material costs easing, construction costs in 2024 will likely be influenced by factors such as labor shortages and limited choices of building companies. Stabilisation, rather than a significant decrease, in overall construction costs is anticipated.
This challenge in construction costs, combined with the uncertain timeline for projects, led to a 17.2 percent decline in dwelling approvals, even as the value of construction work done increased by 21.3 percent. While there has been an increase in construction completions recently, the downturn in construction starts will likely support the value of established housing.