What’s
ahead for the Australian property market for the balance of 2023 and into 2024?
Over the
last year, we experienced twelve interest rate rises, stubbornly high inflation,
wage decisions that risked a wage-price spiral, and new economic data suggesting
Australia’s economic growth has all but come to a standstill.
You can
understand why some commentators became increasingly worried about the prospect
of a recession.
Yet housing
markets remain stubbornly resilient with rising house prices and skyrocketing
rents.
And our
economy kept bounding along creating jobs for everyone who wanted one
But with
the likelihood that high interest-rate and inflation will keep eating away at
the average Australian's household budget for some time, therefore making
property less affordable, the question I hear many property investors asking
is"What is going to cause property values to increase moving forward?”
Now this is
nothing new.
After the
boom of the late 1980's the media was full of messages that property values
just couldn't get any higher and parents were worried that their children
(today's Baby Boomers) would never be able to afford to buy a home - see how
wrong this was.
In the
early 2000's we experienced a property boom that left many commentators
wondering: "What on earth could make property values get any
higher?"
After the
property boom of 2014-16, the media was full of messages about how unaffordable
properties were and prices just couldn't get any higher - but after a lull and
a couple of false starts we had a once-in-a-generation property boom in
2020-21.
Note: Of course, Australia is a big country
and there are many remote locations where properties remain very affordable -
the problem is that no one really wants to live there.
In general,
we tend to want to live in many of the same choice locations in our big capital
cities.
But if
prices are expensive there, what will cause the value of well-located
properties to keep rising?
I believe
demographics (such as population growth, family formation, how we want to live, and where we want to live) as well as the wealth of the nation will be the main
long-term drivers of our property market and will be much more important than
the short-term fluctuations created by interest-rate rises, inflation or
government intervention.
And while
forecasting is difficult, especially about the future, history is instructive
so let’s look at what happened in the past, even though that’s only part of the
way to look at the future of Australian property.
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What’s ahead for the Australian property market 
