Rental market to reach ‘tipping point’ in 2024: Domain

January 22, 2024

Domain’s Dr Nicola Powell told the Savings Tip Jar podcast the rental market will likely ease some time next year as more renters buy property or move into share houses, and the flows to homeownership could see steady price growth.

1

Image by Leigh on Unsplash

 

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.

Key points
  • Domain predicts the Australian rental market will reach a tipping point in the new year
  • Its forecast comes amid all-time low rental vacancy rates and record-high property prices
  • Property values are expected to continue rising in 2024,with Sydney leading the way

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.

Source: savings.com.au

You might be also interested in

Capi 50f7a4dc513d637923445f70debdc946 6be1992f89fee46aa0d0fb038d4a0f5e
The 9 most common concerns for first-time investors and how to tackle them
In a rapidly evolving financial climate, many first-time investors might be questioning if the timing is right to buy – here’s how to tackle your concerns. When you’re thinking of
VIEW POST
Arec 2024 Web 0248 1
4 megatrends shaping Australia’s real estate market right now
Shifting confidence levels, taxes and interest rates are shaping Australia’s diverse real estate landscape, as home buyers and sellers continue to navigate unpredictable times. Home buyers are facing uncertain market
VIEW POST
Capi 4306bda2208d6d2b9104eb2de3a59f07 2a1a4ee021e66cc6a940c753eebf2e2a
Essential workers in Victoria offered $35,000 discount to build their dream home
Villawood Properties’ Armstrong Creek development is offering essential workers a discount to build their own home dream. Victorian nurses, teachers, cops and firefighters are among the essential workers being offered
VIEW POST
Screenshot 2024 05 31 090033
Vendor and buyer activity high, except in Victoria and Tasmania
In today’s Pulse, Tim Lawless analyses the increasing vendor and buyer activity nationwide. As we approach the cooler winter months the flow of new listings coming to market is slowing,
VIEW POST
Capi B3d54912843fc80d9fb6b06808fd151e 6bfff9c60a5bc9cae1382b8d6f21a586
Ins and outs of body corps
The difference between strata titles and body corp, including levies or fees, can be confusing. But for property owners, it’s crucial to understand the concepts.   What is a strata
VIEW POST
Screenshot 2024 05 28 101414
Why new home listings are selling faster
New home listings are getting snapped up at greater speeds, especially in the capital cities, as increasing buyer confidence and a shortage of new listings drives down the time spent
VIEW POST
Capi Cd4c0223c5976a833524f16d5ee5d943 9fdc3231e5c7c706d2553140093d6245
How student debts impact your home loan borrowing power
Student loans can reduce your home loan borrowing power, but not in the way you may expect. More than three million Australians have HECS university debts or similar government-supported study
VIEW POST
Capi 56e30725b01672b092bf341c573fe07f Db1da0880fd14f085eed026abf97f14d
Federal Budget 2024: Tax cuts expected to boost borrowing power
A typical homebuyer’s borrowing capacity will rise by tens of thousands of dollars next financial year as a result of tax cuts that form part of a federal budget designed
VIEW POST
Gettyimages 2006354243
Federal Budget 2024: $6.2b housing splash
The federal government has unveiled $6.2 billion in new housing spending in this year’s budget, with a major focus on housing for Aussies doing it tough. With near record low
VIEW POST
Money 7864149cfb2
Federal Budget 2024: How this year’s budget tackles the rising cost of living
Tax cuts, energy bill relief and rent assistance are among the measures in this year’s federal budget aimed at bringing down the rising cost of living. Federal treasurer Jim Chalmers
VIEW POST

Get your Free Property Guide.

Here goes your text ... Select any part of your text to access the formatting toolbar.

Get your free Sales Report for Rental market to reach ‘tipping point’ in 2024: Domain

Get your free Sales Report for Rental market to reach ‘tipping point’ in 2024: Domain

Subscribe to hear the latest

Start The Conversation Today.

Call us on:

1300 850 730

Request a Callback:

Send us a Message:

Privacy Policy

Get your Free Property Guide

Get your free Suburb Report for Rental market to reach ‘tipping point’ in 2024: Domain

Privacy Policy

Who we are

Suggested text: Our website address is: https://motionproperty.com.au.

Comments

Suggested text: When visitors leave comments on the site we collect the data shown in the comments form, and also the visitor’s IP address and browser user agent string to help spam detection.

An anonymized string created from your email address (also called a hash) may be provided to the Gravatar service to see if you are using it. The Gravatar service privacy policy is available here: https://automattic.com/privacy/. After approval of your comment, your profile picture is visible to the public in the context of your comment.

Media

Suggested text: If you upload images to the website, you should avoid uploading images with embedded location data (EXIF GPS) included. Visitors to the website can download and extract any location data from images on the website.

Cookies

Suggested text: If you leave a comment on our site you may opt-in to saving your name, email address and website in cookies. These are for your convenience so that you do not have to fill in your details again when you leave another comment. These cookies will last for one year.

If you visit our login page, we will set a temporary cookie to determine if your browser accepts cookies. This cookie contains no personal data and is discarded when you close your browser.

When you log in, we will also set up several cookies to save your login information and your screen display choices. Login cookies last for two days, and screen options cookies last for a year. If you select “Remember Me”, your login will persist for two weeks. If you log out of your account, the login cookies will be removed.

If you edit or publish an article, an additional cookie will be saved in your browser. This cookie includes no personal data and simply indicates the post ID of the article you just edited. It expires after 1 day.

Embedded content from other websites

Suggested text: Articles on this site may include embedded content (e.g. videos, images, articles, etc.). Embedded content from other websites behaves in the exact same way as if the visitor has visited the other website.

These websites may collect data about you, use cookies, embed additional third-party tracking, and monitor your interaction with that embedded content, including tracking your interaction with the embedded content if you have an account and are logged in to that website.

Who we share your data with

Suggested text: If you request a password reset, your IP address will be included in the reset email.

How long we retain your data

Suggested text: If you leave a comment, the comment and its metadata are retained indefinitely. This is so we can recognize and approve any follow-up comments automatically instead of holding them in a moderation queue.

For users that register on our website (if any), we also store the personal information they provide in their user profile. All users can see, edit, or delete their personal information at any time (except they cannot change their username). Website administrators can also see and edit that information.

What rights you have over your data

Suggested text: If you have an account on this site, or have left comments, you can request to receive an exported file of the personal data we hold about you, including any data you have provided to us. You can also request that we erase any personal data we hold about you. This does not include any data we are obliged to keep for administrative, legal, or security purposes.

Where your data is sent

Suggested text: Visitor comments may be checked through an automated spam detection service.

Get your Free PDF copy of Make Money Simple Again