This year saw the cash rate hit a 12-year high, the median house price reaching a record high, and rental vacancies hit an all-time low.
While the worst for renters could be over in a matter of months, house prices are forecast to continue rising in 2024, Dr Powell, Domain chief of research and economics, told the Savings Tip Jar podcast.
“We are forecasting that tipping point for the rental market next year,” she said.
“There're a few reasons [as to] why are we expecting that to occur.
"We've started to see an increase in the number of people per household.
"That transition is probably playing out more strongly in the rental market, where it's easier to transition to a share house or move location, drop a bedroom.
“And, also … we've passed the peak of record levels of overseas migration into Australia, and most overseas migrants do rent upon arrival."
Another factor said to be able to lift the rental vacancy rate from its current low of around 0.8% is an influx of first home buyers entering the property market in an effort to exit the rental market.
“Stretched affordability [for those purchasing property is] … going to continue to play out next year,” Dr Powell said.
“But there are many schemes for first home buyers that could help tenants to actually transition to becoming homeowners quicker.”
Such schemes include the soon-to-launch Help to Buy shared equity scheme and the recently doubled Queensland first home owner grant.
But while Domain expects the market to improve for Aussies seeking rental accommodations, those hoping property prices will ease might be in for a disappointing year.
House prices forecast to rise as much as 9% in 2024
Domain is forecasting even more growth for property values in 2024.
“I think that's really what everybody wants to know is what is going to happen to the property market next year,” Dr Powell said.
“What we are forecasting is largely an increase in property prices Australia wide into the regional markets as well as across our major capitals.”
However, the property group is far from forecasting a ‘boom’ in prices.
“While we are forecasting growth, it's nothing compared to some of the upswings that we have seen unravel in some of our capital cities in previous price cycles,” Dr Powell said.
When it comes to property price growth, the capital cities are tipped to outperform, with Sydney leading the way.
Domain is forecasting Sydney house prices to climb between 7% and 9% next year.
Meanwhile, those of Brisbane and Adelaide have been tipped to rise 7% to 8%, and Perth property is expected to climb 6% to 7%.
However, Melbourne property owners mightn’t realise such growth in the new year, with the city’s house prices tipped to grow just 2% to 4%.
“What you tend to find is Melbourne leads price cycles and Sydney follows, and that's not what we've seen over the last 12 months,” Dr Powell said.
“One of the main reasons for the difference in performance is supply level.
“When you look at total supply in the market, compared to Sydney and some of our other capital cities – Brisbane and Perth as examples, and even Adelaide – are still grossly under supplied.
“If I was going to pick out any city where supply levels are much better, that is Melbourne, I think partly because of the ability for Melbourne to sprawl.”
The expert noted that numerous happenings could impact its forecasts, a major one being a cash rate cut.
"If we do see interest rates being cut towards the latter end of next year, that could be the spark that's needed to provide a stronger boost to pricing," Dr Powell said.
Image by Leigh on Unsplash.
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