In 2024, the Australian property market is experiencing robust growth, defying earlier expectations of an imminent interest rate hike. Analysts from major banks had previously predicted a quarter-percentage-point increase in the cash rate by the Reserve Bank on Melbourne Cup Day to address inflation concerns. Despite this projection, the demand for housing is surpassing supply, leading to a sustained increase in property prices nationwide.

Dwelling values have consistently risen, recording a national increase of 7.6% in 2023, as reported by CoreLogic figures. Projections suggest that this upward trend may result in a record high, with momentum expected to continue into the next year. This positive outlook contrasts with earlier predictions of a significant decline of 15 to 20% in property prices.

The Commonwealth Bank (CBA) is at the forefront of projections for 2024, foreseeing a 5% growth across Australia. Sydney and Melbourne are expected to experience increases of 4% and 5%, respectively. CBA’s head of Australian economics, Gareth Aird, suggests that Melbourne’s house prices may exhibit a slightly greater increase, attributing this to a comparative lag in growth during the current year.

Looking at the future interest rate outlook, Aird anticipates that the November rate hike, if implemented, will be the last before potential rate cuts in late 2024. This expectation aligns with a broader consensus among major banks, suggesting that subsequent rate cuts are likely from September of the following year.

The market’s resilience is attributed to an ultra-strong rental market and a persistent lack of housing supply, exacerbated by a mismatch between population growth and the rate of construction. Aird emphasizes that these factors contribute to the sustained increase in house prices across the country.

NAB Chief Economist Alan Oster shares a similar sentiment, stating that a 25-basis-point increase is unlikely to significantly impact house prices. Oster suggests that individuals facing financial strain may adapt by taking on additional employment or cutting back on non-essential expenditures.

Forecasts from various banks differ slightly, with NAB and ANZ predicting a 5% national increase in house prices for 2024. Westpac offers a more conservative estimate of 4%, with varied projections for Sydney and Melbourne ranging between 3% and 6%.

Consistent with other banks, Westpac predicts that rates will be cut in the second half of 2024, citing a forecasted national house price rise of 4%. Westpac’s Senior Economist Matthew Hassan anticipates November as the likely endpoint for rate increases, contingent on inflation aligning with the RBA’s goal of sub-3%.

In conclusion, despite the earlier anticipation of an interest rate hike, the consensus among major banks is that Australia’s property market will continue its upward trajectory into 2024. Market resilience, coupled with anticipated rate cuts in the latter part of the year, suggests a sustained period of growth for the real estate sector.