2024 is shaping as a positive year in residential real estate, continuing the momentum that built up in key markets as 2023 evolved.

I don’t expect boom markets, but steady and sustainable growth in the most capital cities and regional markets.

Just as 2023 defied the forecasts of economists and news media, delivering solid price growth in most jurisdictions, 2024 will do better that the pessimistic predictions that emerged late in 2023.

Those who predicted significant price decline for 2023 and 2024 have something in common: they all believe the biggest factor is interest rates. In the simplistic mindset of bank economists, movements in interest rates dictate what will happen with dwelling prices.

History has shown this is false and 2023 provided further confirmation. There were multiple increases in the cash rate but prices continued to increase in most major markets, proving there were more powerful forces driving prices.

Those elements can be distilled to one word: shortage.

The Australian housing market has shortages of everything that matters: we have been building too few new dwellings, there are too few homes listed for sale and there’s an undersupply of rentals.

The shortage factor has been exacerbated by high population growth, turbocharged by record levels of overseas migrants.

And, as we consider prospects for 2024, there are no remedies in sight. The building industry has myriad problems and can’t produce homes fast enough. All levels of government, but state governments in particular, stymie development with restrictive taxes and red tape which slows everything down. Policy changes are invariably detrimental to investors which deters the cohort that supplies 90% of the homes people rent – and that worsens the rental shortage.

The other big factor that will impact 2024 is the steady rise in buyer activity throughout 2023. The year began with weak markets in Sydney, Melbourne and Brisbane, as well as regional NSW, Victoria and Queensland. But as the year evolved, sales activity picked up steadily until, by the September Quarter, these markets were pumping strongly.

This is the momentum that will create a strong start to 2024 in those key cities.

Meanwhile, Western Australia and South Australia and their state capital cities avoided the decline seen elsewhere in 2022 and continued to perform well in 2023. But late in 2023 sales activity started to fade in Perth – the first signs of decline after three growth years. Adelaide, meanwhile, continued to show steady performance.

The major exceptions to the general theme of strong sales activity and steady price rises are Canberra and Darwin. The ACT and the Northern Territory are the weakest economies in the nation and that is reflected in their anaemic property performance.

So here are my forecasts for 2024:-

Rising markets will include Sydney, Melbourne, Brisbane, Regional Queensland, Regional NSW.

Steady markets will include Adelaide, Regional SA, Regional Victoria, Hobart, Regional Tasmania.

But Perth and Regional WA are likely to be weakening markets, no longer pumping as strongly as they were previously.

Canberra and Darwin will continue to be struggling market.

And the emerging market sectors to watch comprises markets with affordable apartments, including inner-city Brisbane, Melbourne and Sydney.

In the past year there has been a noticeable uplift in demand in locations with a high content of apartments in the mix, as more and more buyers opt for units for lifestyle AND affordability reasons.

So, overall, a positive year but not a boom year, with prices rising in most (but not all) markets across Australia.