Domain tips 2024 as a record year for house prices + top 5 market predictions

A suburban street in Melbourne on a crisp Spring day. Green-waste bins do the footpath.
A quiet residential street in a Melbourne suburb.

Property market predictions for 2024 tip the new year as a winner for existing homeowners, as affordability grows worse for have-nots, according to Domain.

The story of the property market in 2023 was defined by undersupply and steep prices, unseasonal selling activity, the dreaded fixed-rate cliff, and the growing reliance on property as a stable investment. 

In 2024, Domain predicts demand for property will ignite as interest rates come down, the federal government’s ‘Help to Buy’ scheme rolls out, and the population swells – inevitably increasing home prices due to supply shortages. 

But the new year could also bring about great shifts in the way Australians acquire property, with changes to the mortgage serviceability buffer and generational inheritance norms, alongside changing attitudes that steer us towards urban densification. 

What does all this mean if you plan to purchase a home in 2024?

Prediction #1: An interest rate cut will spark housing demand

A close-up of somebody cutting a plant with a garden pruner

In the first part of 2024, affordability and borrowing power issues will continue to make it difficult for many first-home buyers

However, Domain predicts that cuts to the cash rate towards the end of the year will move the queue along, letting those who can afford low-rate home loans into the homeowners club.

As a side-effect, we’ll likely see demand increase, creating another upswing in prices and closing the door on those who are priced out again. 

Either interest rates will go down, or the mortgage serviceability buffer will drop 

If mortgage serviceability buffers lower, it would be a reversal of the Australian Prudential Regulation Authority’s (APRA) decision to lift the buffer from 2.5% to 3% in October 2021. 

It’s likely to have a similar impact as cutting the cash rate, according to Domain, lifting the borrowing power for some to a point where they can afford to buy while driving demand ever higher. 

Calculate your borrowing power (including serviceability buffer) to see what you can afford.

Prediction #2: Buyers will chase home affordability wherever they can find it

An aerial view of a suburban street in South Australia

Urban spread and the popularisation of overlooked areas will rise as policy shifts towards affordability 

As affordable housing options disappear in popular suburbs, buyers will turn to areas they’ve previously overlooked and urban spread will ripple out, Domain says.  

Buyers will hone in on so-called ‘bridesmaid suburbs’ – suburbs considered an alternative to the most popular one in an area.

Domain also predicts federal Labor’s Help to Buy scheme, slated to begin in 2024, will ramp up demand for affordable homes, especially units, in the capitals. 

The new scheme will theoretically help usher new buyers into the market, stretching the already thin housing supply further. More buyers competing for the same number of houses will likely cause prices to rise.

A generation inheritance shift 

Domain says Baby Boomers may opt for an early inheritance for their children, and may even skip a generation to help out their grandkids. 

Related: How does property inheritance work? 

Prediction #3: ‘YIMBYs will replace NIMBYs’

Old, weatherboard cottages sit before a brand-new high-rise apartment block in Brisbane's West End.
West End, Brisbane. The mix of the old and new as urban densification grows.

Domain predicts that 2024 will be a “year of progressive housing and planning reforms” for Australia that may even see the not-in-my-backyard (NIMBY) clan make a swing to yes-in-my-backyard (YIMBY) mindsets. 

Urban densification will increase in areas where people want to live as governments adopt new attitudes towards housing development and affordability, rebalancing the planning powers of local governments to decrease NIMBY influence.

Prediction #4: Population growth will drive up property prices

A real estate agent attends to multiple potential tenants at a rental inspection

Domain predicts that Australia’s growing population will continue to affect housing prices, with the recent record migration rates continuing to drive up prices.  

Renters will not only have more competition for rental properties but may be compelled to buy – if they can afford it. 

Prediction #5: Rental markets reach a tipping point

Three young housemates eat breakfast together around the dining table

The number of renters will continue to increase (along with the time they spend renting) in 2024, according to Domain. 

However, Domain also predicts that the rental market will reach a ‘tipping point’ at some point in the year. Price growth will slow and “some sub-markets will operate with a more balanced rental market”. The cause? Affordability. 

Domain predicts more renters will opt for sharehouses to reduce costs and that first-home buyer incentives will spark a transition for many to homeownership. 

“Cashed-up buyers will benefit” from mortgage stress 

According to Domain, mortgage stress will weigh heavily on some investment property landlords, forcing them to sell in the first part of the year. 

As it goes, “cashed-up buyers” will scoop up these properties to add to their collection.

If you’re getting ready to buy, make sure you understand the process, including how to buy your first home. Mozo offers a range of home loan guides that aim to help you understand the various bits and pieces of the journey to homeownership. 

If you’re well-versed in the home buying process, and you’re ready to compare home loans, then check out some of the features and interest rates below, or browse some of the best home loans in Australia

Home loan comparisons on Mozo - last updated 25 February 2024

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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