Monthly Property News 12th Edition 2024.

“Forecasts and Trends for 2025”

Hi everyone, I’m Jason Mudford from OBrien Real Estate with the twelfth and last edition of the property news for 2024.

Property research firm SQM has forecast Melbourne will continue to lose ground until an interest-rate cut, which is most likely around the middle of 2025. Founder Louis Christopher, said with even with a change in the housing market’s fortunes when the Reserve Bank lower the cash rate, Melbourne’s typical home price is predicted to end next year between 1 to 5 per cent down. PropTrack translates that forecast anywhere from $7,930 to $39,650 drop in home prices. Tim Lawless Research Director for CoreLogic in his recent December 2 Home Index Report said, “the downturn is gathering momentum in Melbourne and Sydney,”

Louis Christopher also said he “strongly believes that overall population growth is putting a floor under the market”. However, the population in Australia is forecast to be in the top three OECD developed nations for population growth until 2030. Victoria’s official population was as of 31 March 2024, 6.959 million and the Australian Bureau of Statistics (ABS) has forecasted Victoria’s population to reach between 7.6 and 8.2 million people by 2032, and by 2046 the forecast from id forecast is 9.208 million and by 2071 the ABS forecast it to be between 13.765 and 11.245 million.

Supply will be another metric to watch again in the coming new year, but it won’t have as strong of an influence on the performance of the market as interest rates. Building approvals for October were released by the ABS on Monday and we saw a 4.2% increase for the month with year to date being a 6.1% increase, Victoria saw a 3.3% increase, although apartment approvals overshadowed housing approvals.

In terms of demand in 2025, apart from the strong population growth, the recent October stamp duty concessions for investors and foreigners for “off the plan” strata titled property, will likely see demand increase in this space. Coupled with that, last week’s federal bill passing parliament for the 2% deposit family guarantee will help first home buyers, single parents and families into a home. The absence of Chinese investors is emerging, Chinese buyers, once some of the most significant contributors to the new apartment sector of housing markets are dramatically scaling back their involvement. Data from the Foreign Investment Review Board (FIRB) shows that offshore spending on Australian homes has plummeted by 17% in the past year.

Reviewing CoreLogic’s November’s home value index, we saw Melbourne home prices for all dwelling types fall 0.4 per cent for the month which takes the 12-month price decrease to 2.3 per cent, the same time in 2023 we had a 3 per cent increase, which goes to show interest rates and the uptick in listing supply has had an impact on prices. Regional Victoria faired a little better for the month declining 0.1% but declining 2.8% for the 12 months.

The heat in the rental market has certainly come out of it, this time last year rental prices were tracking at between 11.1 and 11.6 per cent in growth, November this year has the growth number between 4.9 to 5.2 per cent. Yields are stronger though for the investor with an average increase of approximately 0.3 per cent.

ANZ now joins National Australia Bank and Westpac who have revised their expected rate cuts from the Reserve Bank to start in May 2025, with just the Commonwealth Bank holding its position of a rate cut in February 2025. The reason for the change on rate cut predictions is notably jobs growth and business conditions are continuing to show resilience along with the RBA remaining concerned about upside risks to inflation.

The latest Roy Morgan research revealed that 26.2% of mortgage holders were classified as “at risk” of mortgage stress in the three months to October. This figure represents a 4.1% drop since June, coinciding with the introduction of Stage 3 tax cuts that boosted household incomes.

And lastly, Aussies stocks up 11% so far this year with 1 month to go.

They say the best of all gifts around any Christmas tree is the presence of a happy family all wrapped up in each other. Wishing you a very Merry Christmas surrounded by your precious family, and many blessings for the coming year.

Remember the information provided is of a general nature, you should always seek independent legal, financial, taxation or other advice in relation to your unique circumstances.

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