Australian house price growth to be ‘muted’ in 2024: Oxford Economics
AUSTRALIA’S housing market is at an inflection point, as the factors that boosted prices to record highs last year are now starting to fade, said Oxford Economics, which expects 2024 to be softer for property prices.
Maree Kilroy, senior economist at Oxford Economics Australia, wrote in a research note that the company forecasts home price growth of 2.7 per cent nationally in 2024. That compares with an 8.1 per cent surge in 2023, according to property consultancy CoreLogic.
Australia’s property market surprised with a recovery last year, despite the central bank’s 4.25 percentage points of monetary policy tightening since May 2022. The increases were largely fuelled by a lack of new housing stock and a surge in population growth.
The Reserve Bank of Australia last left interest rates at a 12-year high of 4.35 per cent, and maintains a hawkish tone as the economy and labour market show ongoing resilience.
The housing price momentum eased in recent months as rate hikes, persistent cost-of-living pressures, worsening affordability, rising advertised stock levels and poor consumer sentiment came together to take some heat out of the market.
Kilroy said deteriorating housing affordability will continue to play a key role in containing the pace of growth, especially for houses. Still, a significant shortage of homes is likely to persist across the country, placing a floor under prices, she added.
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Australia faced a deficiency of more than 100,000 homes in 2023. That is expected to ease slightly this year to roughly 97,000, going by Kilroy’s research.
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