Reflecting on 2024

Interest rates remained flat

The Reserve Bank of Australia (RBA) kept the cash rate steady in 2024 at 4.35%.

Inflation has fallen substantially since the peak in 2022. Headline inflation was 2.8 per cent over the year to the September quarter, but underlying inflation (as represented by the trimmed mean) remains a concern for the RBA.

Over the year to the September quarter, it was 3.5 per cent, which means it’s still some way from the 2.5 per cent midpoint of the RBA’s inflation target. The RBA doesn’t expect inflation to return sustainably to the midpoint of the target until 2026.

In other news, this year we saw a shake-up of the RBA. One big change was that there were only eight cash rate decisions (instead of 11), following a recommendation of the Review of the Reserve Bank in March 2023. Another recommendation was that monetary policy processes be more transparent, with press conferences after each meeting.

Property prices continued to climb, but the market is cooling

Australia’s property prices continued to rise in 2024, but the pace of growth slowed down.

November marked the 22nd consecutive month of property price growth across the country, but the rise was modest, at 0.1%. It was the weakest Australia-wide result since January 2023, and could signal the end of rising house prices, experts say.

Perth was the standout in terms of property price growth in 2024. The year-on-year change was 21%.

Adelaide and Brisbane also performed strongly, with a year-on-year change of 14% and 12.1% respectively. Sydney had more modest gains of 3.3%.

Melbourne saw property prices decline -2.3% year-on-year, while prices were fairly flat in Hobart (1%), Darwin (0.9%), and Canberra (-0.1%).

Rental growth slowed

Following a period of exceptional rental growth, Australia’s rental surge cooled in many markets, as rental demand eased.

Annual rent increases for houses hit multi-year lows in Sydney, Melbourne, Brisbane, Perth and Adelaide in the September quarter, indicating a relentless stretch of rising rents may have peaked.

Sydney recorded its weakest growth rate for rental houses for a September quarter in four years, with annual gains at their lowest in almost three years. That said, the average weekly rent was still at a record high of $775.

Melbourne house rents saw the weakest figures for a September quarter since 2021, while rents in Brisbane declined for the first time in just over four years.

The slowed rental growth was attributed to decreased demand, with more people opting for shared housing and intergenerational living, and overseas migration down.

Meanwhile, Darwin and Hobart experienced their strongest September quarter for rental growth since 2020 and 2017, respectively.

Government incentives were announced

There were several announcements in the May Federal Budget aimed at helping aspiring homeowners to enter the market.

The government allocated $5.5 billion towards its shared equity Help to Buy Scheme in 2024-25 for those on low and moderate incomes. Under the scheme, the government would provide an equity contribution of up to 40% of the purchase price for new homes and 30% of the price of existing homes. The bill was passed into law by parliament last month.

The government also increased its line of credit to Housing Australia by $3 billion, and Housing Australia’s liability cap by $2.5 billion. Housing Australia administers the Home Guarantee Scheme, which encompasses the First Home Guarantee (FHBG).

Under the FHBG, part of an eligible home buyer’s home loan from a participating lender is guaranteed by Housing Australia. Homebuyers can purchase a home with as little as 5% deposit without paying Lenders Mortgage Insurance. 

Other incentives designed to relieve cost-of-living pressures included a $300 energy bill rebate in the 2024-25 year.

The government’s tax cuts also came into effect. For some people, this meant their borrowing power increased.