The year 2023 defied the predictions of economists and media, demonstrating robust growth in property prices across many areas, contrary to expectations. This trend is likely to continue in 2024, surpassing the recent pessimistic forecasts.

Many who anticipated a significant drop in prices for 2023 and 2024 focused primarily on interest rates as the deciding factor. This perspective, often held by bank economists, suggests that property prices are primarily influenced by interestrate fluctuations. H

However, 2023’s events have further disproven this theory. Despite multiple increases in the cash rate, property prices in major markets still rose, indicating that other, more potent factors were at play.

The key driver can be summarized in one word: shortage. In Australia, there’s a pervasive scarcity in the housing market – not enough new homes are being built, there are too few listings, and rental properties are in short supply. Thissituation is intensified by rapid population growth, fuelled by high levels of immigration.

Looking ahead to 2024, there seems to be no immediate solution. The construction industry faces numerous challenges and is unable to meet housing demands quickly. Governmental layers, especially state governments, hinder development withexcessive taxes and bureaucratic obstacles, further slowing progress. Policy changes often discourage investors, who provide most rental properties, exacerbating the rental shortage.

Another significant factor for 2024 is the steady increase in buyer activity observed throughout 2023. The year started with sluggish markets in Sydney, Melbourne, Brisbane, and regional areas of New South Wales, Victoria, and Queensland.However, as the year progressed, sales activity consistently grew, leading to a robust market by the September Quarter.

This momentum is poised to ensure a strong start to 2024 in these major cities and regional zones.

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