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

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?

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.

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? 

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.

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. 

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.