Welcome to our April newsletter. It has been a big first quarter in property with plenty of activity. Buyers are growing in confidence with two RBA hold decisions so far this year and an expectation of rates dropping towards the back half of the year.

Interest Rate Update

The RBA held the cash rate at 4.35% in both of their meetings in 2024, with the RBA encouraged by slowing inflation numbers. The latest inflation figures show a drop to 3.4% in the year to January 2024, down from 5.4% in the September quarter and 4.1% in the December quarter. Annual inflation is at its lowest since November 2021, which has been a quicker decline than what the market was predicting.

Experts are forecasting that the RBA will hold interest rates until middle of the year and then there may be a cut or two before years end. Sweet relief!

Property Prices

CoreLogic provided their monthly update and it shows Melbourne property prices fell just 0.2% in the three months to March 2024. Despite this the housing values have risen 3.2% in the last 12 months. The quarterly drop is contrary to anecdotal evidence from agent and client conversations, but this can happen in March given how little property is sold in Jan and Feb.

Source: CoreLogic

Forecasts from market specialists are picking property prices rise between 1-5% in 2024. With ANZ forecasting 3-4%, CBA estimating 5% and PropTrack predicting a 1-4% rise. This expected rise is being driven by strong population growth, tight property supply and more optimism around interest rates.

Clearance Rates

Clearance rates have trended higher year on year to start 2024. Melbourne’s clearance rates were above 70% for the week ending April 7, up from 51% for the same period last year.

This is being driven by confidence returning to the auction markets amid falling inflation and a growing expectation that lower interest rates later this year. Both of which should see housing price growth accelerate.

House vs Apartments

CoreLogic has detailed just how far the gap between house and unit/apartment values has widened. The difference between the two was 16.7% in March 2020 across the combined capital cities, it has now leapt out to 45.2%.

House premiums rose through the pandemic as more people wanted space and were more willing and able to live further out in our cities. This trend has continued through that want and scarcity of land in inner city suburbs.

Source: CoreLogic