Australian Housing Shortage: Multiple Forces Propelling Price Increases in 2024
As Australia strides into 2024, the housing market continues to be influenced by a perfect storm, propelling prices higher and intensifying the nation’s housing shortfall.
The current landscape is being driven by a mix of economic, population, and policy changes, which are reshaping how people invest in property all over the country. We’ve taken a deep dive into the key factors propelling property prices this year, highlighting why this is a prime time for investors to capitalise on the current state of play.
Economic Momentum: Australia’s economy has maintained a robust trajectory, thanks to a resurgence in consumer spending, strong business investment, and an uptick in employment. The nation’s GDP growth has surpassed expectations, instilling confidence in investors and property market growth. With interest rates remaining relatively low and borrowing costs remaining favourable, this will entice both homebuyers and investors to capitalise on the market’s growth potential.
Population Growth: Driven by a combination of natural increase and immigration, Australia’s population is growing at a rapid rate. This influx of residents places immense pressure on housing supply, exacerbating the existing shortfall and fueling competition among prospective buyers. Major urban centres, particularly Sydney and Melbourne, bear the brunt of this population surge, where demand for housing consistently outstrips supply, contributing to soaring property prices.
Supply Issues: Initiatives aimed at stimulating housing construction and enhancing affordability are underway, yet their impact remains contingent on execution and effectiveness. Challenges around rules and regulations, finding land, and issues with getting materials can slow down how quickly new houses are built. This makes the shortage of homes worse and pushes prices up. As more people want homes than there are homes available, the housing market is extremely unbalanced, making it harder to enter the market.
Policy Implications: Government actions significantly influence how the property market operates. Efforts to encourage building more houses and making them more affordable are in progress, but their success depends on how well they’re carried out.
Rules and regulations, like changes in zoning laws and investments in infrastructure, are crucial for increasing the number of houses available and making them more affordable. However, specific measures to help first-time buyers and promote homeownership will also make it easier for more people to find homes, potentially leading to increased demand and competition in the market.
Seizing the Opportunity: Now is an opportune moment for property investors to capitalise on the potential of the Australian property market. With demand surpassing supply and a robust economy, there is ample room for property values to appreciate and rental income to flourish. Moreover, favourable lending conditions make it easier for new investors to enter the market. By conducting thorough research, staying informed about market trends, and adopting a long-term investment strategy, investors can position themselves to reap the rewards of the housing shortage and market dynamics.
Australia’s housing shortfall presents a mix of challenges and opportunities, shaping the trajectory of the property market in 2024 and beyond. Economic growth, population expansion, limited housing availability, and government policies all contribute to driving prices upward, emphasising the need for strategic intervention and investment.
For property investors, this presents an ideal time to leverage the market’s growth potential and diversify their investment portfolios.
By making informed investment decisions, embracing the opportunities inherent in the Australian property market, and partnering with property professionals such as AllianceCorp, investors can navigate the complexities of the market with confidence.
To explore your investment options and receive personalised guidance, request a complimentary discovery session with one of our Senior Property Wealth Planners below!