The property trends that drove price increases in 2023/24 are anticipated to continue into quarter 4 of 2024, supporting ongoing price growth despite challenges such as reduced affordability and rising interest rates. This persistent growth is partly due to the continued strength of regional markets, which are experiencing a resurgence as soaring prices in major cities push buyers towards less densely populated areas. While the pace of national price growth is expected to moderate, significant regional variations are likely, reflecting deepening imbalances between supply and demand across states and territories.

The series of 13 interest rate hikes implemented between May 2022 and November 2023 has resulted in a substantial average increase in mortgage repayments—up by 62%—and has reduced borrowing capacity by more than 30%. Despite these financial pressures, the housing market has demonstrated resilience, characterized by minimal forced sales and an uptick in both price growth and demand through 2023.

Looking ahead, although elevated interest rates have strained borrowing capacities and diminished housing affordability, a major price correction in 2024 remains unlikely. The forecast indicates that price growth will persist, supported by a supply of homes that is expected to remain limited relative to strong buyer demand. Furthermore, population growth is projected to outstrip the pace of new development, which will continue to be constrained by high construction costs and extended build times.

The severe tightness in the rental market is also likely to bolster home price growth. As rental prices continue to rise, individuals who have the financial means may accelerate their transition to homeownership, thereby reducing rental demand and further supporting home prices. Thus, the combination of tight rental conditions and robust rental price growth is expected to cushion against significant declines in property values, reinforcing the overall stability of the housing market.