As the property market emerges from its summer slumber, many are predicting Melbourne real estate values will rise again in 2024, albeit modestly.
Let’s take a look at the factors likely to impact property – both broadly and locally – in the year ahead.
Population growth underpins sustained demand
Australia’s population has just ticked over 27 million, with Melbourne’s population sitting at 5,316,000 at the time of writing – a 1.55% increase from 2023. According to Invest Victoria, Greater Melbourne’s population will continue climbing, growing to 8.04 million by 2051.
Post-pandemic immigration, although having peaked in 2022/2023, will continue in 2024, creating sustained demand for both rental and owner-occupied housing. Despite policy efforts, the supply of new housing is not keeping up with demand due to the high cost of construction and lingering challenges in the labour market.
Rental markets remain tight
With more Australians renting for longer, demand for rental accommodation is strong. Despite this, the latest Domain data points to Melbourne rents steadying after a long streak of price rises. Many are predicting a more balanced rental market in 2024.
Demand for rental housing typically fuels investment in real estate, while rising rents encourage would-be home buyers to bring forward their purchase plans.
Melbourne tipped to rise
The PropTrack Market Outlook Report forecasts a 1 – 4% increase for Melbourne in the next 12 months, on the back of a 1.9% increase in 2023.
In terms of buyer demand, Domain data reveals Melbourne buyers are searching for properties with a ‘pool’, ‘courtyard’ and/or ‘study’. ‘Unit’ was also among the top 10 search terms for 2023, suggesting a renewed interest in apartment living – an increasingly popular option for downsizers, first home buyers and those seeking a ‘lock up and leave’ lifestyle.
Economic factors may curtail property price growth in 2024.
The high cost of living is likely to continue impacting households. With inflation remaining stubbornly high, the big four banks are predicting the Reserve Bank of Australia won’t cut interest rates until late 2024 at the earliest. This lack of financial relief could see some homeowners with weighty mortgages opt to sell their property. For buyers, the high rates make affordability a challenge.
Meanwhile Victorian property investors are facing significantly higher state land and other taxes, which could see some investors exit the market.
The Boroondara forecast
Jellis Craig Boroondara Managing Director, Steve Abbott, predicts Boroondara property values will hold steady or rise modestly in 2024, as buyers continue to see value in one of Melbourne’s premier municipalities.
“Buyers and vendors might be more inclined to act this year, creating opportunities and generating a healthier market,” he says.
Jellis Craig Boroondara Partner, Geordie Dixon expects renovated family homes and well-located units and town homes in Boroondara to be in demand.
“We are receiving lots of early interest in family homes close to leading schools, shops and transport, as well as renovated units and townhouses.”
Geordie says while ‘turn-key’ homes have dominated buyer enquiry in recent years, a renewed interest in renovation is emerging as building costs stabilise.
“We are starting to see more buyers prepared to make updates to a property. Buyers are also still seeking homes with a dedicated study or work from home area, despite more workers returning to the office in 2024,” she says.
For in-depth data on the market in your area, check out Jellis Craig suburb insights.
If you are planning a property move or would like to discuss the value of your home in the current market, reach out to our experienced team at Jellis Craig Boroondara.