The Future of the Australian Property Market: State-by-State Predictions 2024

As we approach 2024, the Australian property market faces a delicate balancing act, with inflationary pressures, potential cash rate adjustments from the Reserve Bank of Australia (RBA), and varying economic conditions across each state. Investors, homebuyers, and market analysts are paying close attention to the trajectory of the property market, particularly the contrasting trends between units and houses. In this article, we’ll take a state-by-state look at the property landscape, while factoring in recent announcements from the Big Four banks and discussing how inflation and cash rate fluctuations may affect the market.

**National Overview: Inflation, Cash Rates, and Market Sentiment
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Australia has experienced sustained inflationary pressure throughout 2023, with the current inflation rate hovering around 4.1% for the year to December. The RBA's cash rate currently sits at 4.35%, following a series of rapid hikes that aimed to bring inflation back within the target range of 2-3%. Many economists expect inflation to decline steadily in 2024, but monetary policy will likely remain tight, with the RBA signalling a cautious approach.

In a recent report, all Big Four banks—Commonwealth Bank, ANZ, Westpac, and NAB—predicted varying paths for the cash rate in the short term. Commonwealth Bank expects the RBA to hold the rate steady for much of 2024 before gradual reductions toward the end of the year. Meanwhile, ANZ anticipates one final rate hike in early 2024, followed by a steadying period. These cash rate movements are crucial, as they directly impact borrowing costs and, consequently, property demand.

**New South Wales: Diverging Paths for Units and Houses
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Sydney’s property market has seen a moderate recovery in house prices following a turbulent 2022. Houses in the city’s premium suburbs have seen steady demand, with prices rising by 5.3% in 2023. However, unit prices have shown a weaker performance, growing only 1.8% year-to-date, reflecting a lag in the unit market's recovery.

**Key Trends:
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Houses: The median price for a house in Sydney now sits at approximately $1.3 million, and experts predict continued growth as the supply of detached homes remains tight. However, interest rate hikes may cap growth as borrowing becomes more expensive.

Units: Units, particularly in high-density areas, face more limited demand due to increased supply and changes in lifestyle preferences post-pandemic. The oversupply of units in areas like Parramatta and Olympic Park will continue to suppress price growth in 2024.

**Victoria: Stabilisation and Mixed Signals
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Melbourne’s market saw corrections in 2022 but has since stabilised. House prices in inner suburbs like Hawthorn and Brighton have experienced strong growth, while outer suburbs remain sensitive to interest rate changes. Melbourne’s median house price has climbed to around $920,000, and unit prices have held steady, with modest growth of 2.5% in 2023.

Key Trends:

Houses: Houses in Victoria’s premium and middle-ring suburbs are expected to see moderate growth, but affordability challenges will continue to impact first-home buyers. As interest rates rise, demand for larger homes in the outer suburbs may weaken.

Units: Unit demand in Melbourne is expected to improve, driven by returning international students and higher levels of immigration. Unit prices in popular inner suburbs like Yarraville and Elwood may see more notable growth in 2024 as demand outpaces supply.

Queensland: A Hotspot for Growth

Queensland, particularly Brisbane, has been one of the country’s strongest-performing markets in recent years. Both houses and units have seen robust demand, spurred by interstate migration, lifestyle changes, and a relatively affordable price point compared to southern states. Brisbane’s median house price now stands at $780,000, while units have seen steady growth, with prices up 4.5% year-on-year.

Key Trends:

Houses: Brisbane houses are set to continue their strong growth trajectory, driven by demand from southern buyers and local market strength. Supply shortages and continued interstate migration will further bolster this sector.
Units: The unit market is also seeing increased demand, with many buyers priced out of houses. Brisbane’s median unit price is currently around $480,000, and there is room for further growth, particularly in the city’s more lifestyle-centric areas.

South Australia: Solid but Unspectacular Growth

Adelaide has been one of Australia’s more affordable capital cities, and its property market has shown steady, unspectacular growth. The median house price in Adelaide is currently around $680,000, while unit prices have remained subdued, growing just 2.1% in 2023. The housing market in South Australia is expected to benefit from continued population growth, but rate rises could temper buyer demand.

Key Trends:

Houses: Demand for houses in Adelaide’s suburban areas is expected to remain steady, particularly as interstate migration from more expensive states continues. However, borrowing costs may slow growth, especially in outer suburbs where affordability is already a concern.

Units: Units in Adelaide remain the least expensive of any major Australian city, and the market is expected to see limited growth in 2024. While demand may rise slightly, unit prices are forecasted to remain flat compared to houses.

Western Australia: Mining and Migration Drive Demand

Western Australia’s property market has been buoyed by strong mining sector performance and population growth. Perth’s median house price is around $630,000, with unit prices lagging, growing only 1.6% in 2023. Housing demand is largely driven by mining industry workers and interstate migration, while unit demand remains comparatively weak.

Key Trends:

Houses: House prices in Perth have experienced growth due to high demand and low supply, and this trend is expected to continue into 2024. The median house price is forecast to rise by 4-6%, although relative affordability could see this number go up as more attention from interstate investors increase.

Units: Units in Perth remain undervalued compared to other capitals, and demand is unlikely to pick up significantly. Buyers are more focused on detached housing, and unit prices are expected to remain flat or experience minor growth.

Tasmania: Market Cooling After a Boom

Tasmania, particularly Hobart, experienced a property boom in the last decade, with house prices skyrocketing by more than 50% from 2017 to 2021. However, the market has cooled significantly in 2023. House prices in Hobart have stabilised at around $670,000, while units have shown minimal growth, reflecting a shift in buyer sentiment.

Key Trends:

Houses: The Tasmanian market is expected to see minimal growth in 2024, with many buyers priced out of the market and interest rate hikes further reducing demand. However, Tasmania’s relative affordability compared to other states will keep its market stable.

Units: Unit prices in Hobart and Launceston remain comparatively low, and demand is expected to stagnate, with growth unlikely in the near future.

Northern Territory and ACT: Steady but Limited

In the Northern Territory and Australian Capital Territory, property market trends have been more subdued compared to the eastern states. Both regions have experienced steady, if limited, growth in recent years.

Northern Territory:
Darwin’s property market has been heavily influenced by the fluctuating fortunes of its local economy, particularly in the resources and defense sectors. House prices have risen modestly, with the median sitting at around $530,000, while unit prices have struggled to keep pace.

Key Trends:

Houses: Growth in Darwin's housing market is expected to remain steady, with modest increases in 2024 as interstate migration and resource sector investment support demand.

Units: Darwin’s unit market remains sluggish, with many investors still recovering from past price declines. Unit prices are forecast to see little to no growth in the near future.

Australian Capital Territory (ACT):

Canberra’s property market remains relatively strong, particularly for houses. The median house price in Canberra is around $980,000, while unit prices have seen weaker growth, rising only 2.5% in 2023.

Key Trends:

Houses: Demand for houses in Canberra remains high due to a strong public sector job market, and prices are expected to continue to grow modestly in 2024. Limited supply will keep the market competitive.

Units: Units in Canberra are experiencing more subdued growth. With a median price around $570,000, unit demand remains stable but less competitive compared to houses.

Conclusion: Navigating Australia’s Property Market in 2024

As we move into 2024, Australia’s property market is expected to experience varied outcomes across the states, driven by regional economic conditions, supply-demand dynamics, and the RBA’s monetary policy decisions.

Houses: In most states, houses are likely to remain in higher demand, particularly in Queensland, Western Australia and Victoria. Price growth may moderate due to high interest rates, but strong fundamentals—such as interstate migration and tight supply—are expected to support continued growth.

Units: The unit market is likely to remain more sluggish, with growth concentrated in key areas like Melbourne and Sydney, where affordability concerns make units a more attractive option for buyers priced out of the housing market.

The RBA’s cash rate is one of the key variables to watch. As inflation cools, any reductions in the cash rate could re-stimulate demand across all property types, though affordability will continue to be a central concern, especially for first-home buyers. Buyers and investors should stay informed about their local markets, watch interest rate movements closely, and take a strategic approach to property purchases in this complex and evolving landscape.