Melbourne house prices are tipped to rise up to $37,000 in 2024.
But a landlord exodus driven by rising state government taxes that is part of the reason more homes have hit the the market than in any other city over the past year will see the city lag behind almost every other capital.
The PropTrack Property Market Outlook Report has forecast 1-4 per cent for the city’s property market in the next 12 months that could bring the median house price to more than $950,000.
PropTrack economic research director Cameron Kusher said while Melbourne was expected to attract less home price growth than Sydney, Brisbane, Adelaide and Perth, it could potentially double the about $17,000 (1.9 per cent) growth the Victorian capital unexpectedly notched in 2023. They had been forecast to decline 7 per cent this year.
Mr Kusher said despite the fastest increase to interest rates since at least the 1990s, rising costs to build new homes and Victoria accounting for a substantial portion of the nation’s incoming migration would combine to drive home values up.
“The fact we are at or near peak interest rate levels could see more people looking to buy next year,” he said.
Home price growth is on the cards in 2024, but Melbourne will lag behind other capitals.
While the Outlook report has flagged a tough year for first-home buyers around Australia, Mr Kusher said record-low rental vacancy rates could drive some of them to find a way to buy a home and escape from increasingly uncertain tenancies.
Ironically, their chances might be improved by landlords selling off rental homes at an accelerated level this year, as Melbourne has more homes for sale than any other capital in part thanks to their exodus.
“There are quite a lot of investors looking to exit Melbourne and Victoria because there are quite a lot of taxes,” he said.
From next year, investment property owners will be hit with increased land tax costs as the state government implements a series of levies to try and recoup Covid-era budget losses.
Real Estate Buyers Agents Association of Australia Victorian representative Luke Assigal echoed the landlord sell off commentary and said he expected the trend could be even more pronounced as planned new taxes on investment and secondary properties came to fruition in the new year.
Homes like 2 Cunneen St in the Bendigo suburb of Long Gully could be set for price gains in 2024. The home is currently listed for $440,000-$480,000.
Speaking as part of REBAA’s end of year analysis for 2023, Mr Assigal said he believed even an uptick in investor sales next year wouldn’t slow the market and predicted there could be as much as 6 per cent growth — about $55,000 for Melbourne’s $917,000 median-priced home.
But he said the fate of first-home buyers in the new year could rest with the Australian Prudential Regulation Authority, who he said could price many back into the market by reducing assessment rates for home loans from the current 3 per cent above the home loan rate of the day.
An interest-rate cut could also drive demand, and Mr Assigal said either scenario could make Melbourne’s undervalued far west, from Werribee to Hoppers Crossing, and outer northern suburbs, like Epping, hot property.
He added that regional areas around Ballarat, followed by Bendigo and Geelong, could also benefit from squeezed homebuyer budgets.
Source : RealEstate.com.au