As we march on into 2024, with January already a distant past, it is time to reflect on the property market of the last 12 months and ask what comes next?
2023 was another extraordinary year for the local real estate market, with the overall performance better than many economists had predicted.
It appears there is never a clear idea expressed in the media on what the direction the market will go, but the results do seem to surprise on the “upside” more often than not. Despite economists’ predictions of interest rates being cut by mid-2024, it is not hard to believe we may see them staying where they are a while longer and perhaps even as far out as 2025. One of the major impacts of higher interest rates is the capacity of borrowers to secure the required finance from banking institutions as assessment rates have naturally jumped significantly in the past year or so, and this feeds back into the amounts borrowers are formally approved for by their chosen financial institution.
Retail sales held up well throughout 2023 but recent data has indicated there may be a softening in those numbers for the months to come. From our point of view, we hope retail sales figures stay buoyant as we appreciate our commercial/retail tenancies need to be profitable to be able to afford the rent and retain staff.
A quick snapshot of our local area shows rental yields of around 3% on residential apartment investments and the median price for 1, 2 & 3 bedroom units at $960,000, $1,600,000 and $2,900,000 respectively. For houses, the rental yield eases to around 2.5% and the median price for 3 & 4 bedroom homes are $4,100,000 and $5,200,000 respectively.
A shortage of property to the market for sale still exists in many price points making it hard to see anything but an upward trend in prices continuing into the latter part of the year. The same exists in the rental arena with groups competing for limited opportunities and significant increases in rent have been secured by comparison to 12 months ago. Tenants should not expect an easing of rents any time soon in our opinion.
