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Australia’s real estate agents are hesitant to forecast a positive property year, with interest rates weighing heavily on their minds.
New research from CoreLogic has given Australians new insights into the fears and expectations of 1,400 of the nation’s real estate agents.
Despite a strong year for property values in 2023, with an 8.1 per cent rise in median home values nationwide, real estate agents are reluctant to predict strong growth in the year to come.
Just 57 per cent of agents are predicting economic growth this year, while 59 per cent forecast a rise in home prices.
Eliza Owen, CoreLogic’s head of residential research, explained that “the broad expectation for housing values in 2024 is that the market will still grow but at a lower rate than observed in 2023”.
At the top of the list of concerns for agents is elevated interest rates. A massive 71 per cent of respondents named fluctuations in interest rates as the primary driver of the real estate market this year, with three-fifths of those predicting a rise in interest rates.
Ms Owen said: “Growth in housing demand is expected to slow amid higher cost-of-living pressures, a higher tax take from bracket creep, and high interest rates.
“This means less savings to put towards housing purchases – indeed the latest national accounts data from the ABS showed the household savings ratio had fallen to its lowest level since 2007.”
Low consumer sentiment is another significant concern for agents, along with an ongoing supply shortage across all states.
Two in five respondents identified low housing stock as the biggest challenge that their agency would face this year.
“There remains a strong mismatch in the supply and demand of dwellings across Australia,” Ms Owen said.
“Ongoing constraints in the construction sector are likely to keep a floor under home values, with the number of completions trending lower throughout 2023.”
Despite some anxiety about the prospects of economic growth in 2024, real estate agents are generally optimistic about Australia’s housing market in the long term.
Dirk Miller, CoreLogic’s general manager, stated: “Our survey respondents from across the real estate industry indicate confidence about house price increases and 2024 economic growth stimulating business in the long run, despite having strong concerns about interest rate fluctuations shaping this year’s market.”
Nevertheless, Mr Miller emphasised that the overall takeaway from the data is a “mixed sentiment” across the property industry.
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