Home Loan, Property Market & Consumer Trends in 2024

With my extensive experience in the industry spanning nearly two decades, I’m here to guide you through the complexities of the current home loan industry, property, and consumer behaviour trends in Australia as we head into 2024.

This blog breaks down these topics into simple, easy-to-understand content, drawing from my years of expertise and expert analysis.

Whether you’re buying a home, investing, or just curious about the market, I’ve broken down the latest trends to help you stay up-to-date.

Key Takeaways

• Home Loan Trends: Growth in digital lending, increasing importance of mortgage brokers, a shift towards refinancing, and changes in borrowing power.
• Property Market Trends: Variable house price movements, resilience in specific markets, popularity of urban units, and regional markets outperforming major cities.
• Consumer Behaviour Shifts: More price-driven spending, changes in retail sales volumes, rising costs impacting choices, and a focus on value for money.

Home Loan Trends for 2024

1. Streamlined Application Processes with Digital Lenders: The home loan landscape is evolving with digital lenders simplifying application processes. This shift towards automated assessments and online applications makes it easier for borrowers, especially those with straightforward financial situations, to navigate the lending process without the need for extensive paperwork​​.
2. Increased Role of Mortgage Brokers: Mortgage brokers have become increasingly important in the home loan landscape. As of late 2022, 69.3% of all new residential home loans were facilitated by brokers. This trend is driven by the complexity and diversity of products in the market, indicating that brokers are key for consumers seeking expert guidance and access to a wider range of loan products​​.
3. Trend Towards Refinancing and Shift in Borrowing Power: With rising interest rates, many Australians are likely to consider refinancing in 2023. This trend is a response to the changing economic landscape, and borrowers need to weigh the potential savings against fees and switching costs​​.
4. Growth in Home Lending: Home lending experienced a significant increase in October 2023, with a 5.4% rise in new lending commitments. This uptick was the first year-on-year growth in almost 18 months, indicating renewed strength in the market. This trend began in March 2023 and showed the fastest growth in owner-occupier finance since November 2021​​.
5. Changes in Average Mortgage Sizes: The average mortgage size in Australia saw varied changes across different states. For instance, New South Wales experienced a 3.7% increase in average mortgage size, while Victoria saw a 1.9% decrease. These regional variations reflect the impact of property prices and market conditions on borrowing​​.
6. National Home Prices Recovery: It is anticipated that national home prices will start to recover from the second quarter of 2023. This recovery is expected to be driven by the limited supply of houses available for sale​​.
7. First-Home Buyers Entering NSW Property Market: The introduction of schemes like the First Home Buyer Choice in New South Wales is likely to encourage more first-home buyers to enter the market. This trend is facilitated by alternatives to upfront stamp duty, making it easier for first-time buyers to purchase homes​​.
8. Interest Rates Balancing Out: There is speculation that interest rates may stabilise or even decrease towards the end of 2023. This change would be a response to the aggressive rate hikes observed previously, and it could influence borrowers’ decisions and market dynamics​​.
9. Banks Reviewing Lending Requirements: With the changing economic environment, banks might revise their lending requirements. This could be a response to decreased borrowing capacity and fewer loan applications, leading to more accommodating lending criteria​​.
10. Regional Centres Remaining Hotspots for Buying Activity: Smaller regional centres in Australia are expected to continue being attractive for home buyers, owing to their affordability and robust local economies. These areas may see sustained demand from buyers, offering opportunities for both first-time buyers and investors​​.

Property Market Trends for 2024

1. High Demand, Low Supply: Housing affordability is expected to continue to be an issue. For example, in WA, in the 12 months leading up to March 2023, around 11,121 people moved to WA from other states, with 26,005 coming in just three months, meaning we needed about 320 new homes each week to keep up. Some studies show that a 1% increase in the number of people coming to WA can make house prices go up by 3.3%.
2. Variable House Price Movements: The Australian property market shows a mix of rising and declining house prices across various regions. While some areas continue to experience price growth, others face declining prices. This variability is influenced by multiple factors, including cash rates, supply-demand dynamics, and local market conditions. Notably, Greater Hobart and Greater Brisbane have seen substantial median house price growth between pre-COVID-19 times and mid-2023​​.
3. Resilience in Specific Markets: Sydney, Melbourne, Brisbane, and notable regional centres like the Sunshine Coast and Gold Coast have shown downturns even before the Reserve Bank of Australia’s rate actions in May. Despite this, certain areas like Greater Brisbane and Greater Perth have shown resilience in their markets. This trend highlights the complexities and varying impacts on local property markets​​.
4. Increasing Popularity of Units in Urban Areas: In city areas offering units at substantial discounts compared to house prices, there has been an increase in demand. This trend is notable in Sydney, where despite a general decline, certain inner-city unit precincts are showing resilience. This is likely influenced by factors such as returning overseas migrants and students, which increases demand for rental units​​.
5. Regional Markets Outperforming Major Cities: Regional areas, particularly in Queensland, are proving more prominent than the largest Australian cities in the property market. Townsville in regional Queensland is highlighted for its performance. The shift towards regional markets reflects a broader trend of buyers seeking affordability and lifestyle changes​​.
6. Impact of Economic and Consumer Sentiment: While economic factors such as interest rates, inflation, and unemployment continue to play a significant role in the property market, consumer sentiment is also a major driver. Improved auction clearance rates and a shift in buyer confidence suggest a more balanced market, particularly for high-quality properties in popular areas​​.
7. Property Market Recovery: The property market is moving into a recovery phase. Despite predictions of distress sales due to the ‘fixed interest rate cliff’, actual data shows a decrease in distressed listings in capital cities. This indicates underlying strength in the market and a rebound from the previous downturns​​.
8. Local Factors Driving Real Estate Trends: Real estate is significantly influenced by local factors, with varying impacts across different regions. For instance, regional Queensland shows a mix of rising, consistent, plateau, and declining markets, underscoring the importance of understanding local market conditions​​.

Consumer Trends for 2024

1. Increased Consciousness in Spending: Australians are exhibiting more price-driven behaviour than before. About 47% of consumers are now opting for lower-priced brands, a significant change from previous years. This shift indicates a strong focus on managing expenditures amidst rising costs​​.
2. Decline in Retail Sales Volumes: There has been a notable drop in retail sales volumes, with a 0.6% decrease in March 2023. This decline is the largest non-pandemic related fall since the September quarter of 2009, marking a significant shift in consumer spending patterns​​.
3. Rising Costs Impacting Consumer Choices: The cost of groceries and grocery-related products has risen, with 67% of Australians feeling these items cost more than in the previous year. This has led to a 49% increase in grocery spending, reflecting the impact of inflation on essential goods​​.
4. Changing Attitudes Toward Apparel Spending: Over half of consumers (55%) feel that apparel, including clothing, footwear, and accessories, costs more than last year. The spending in this category is evenly split, with 27% spending more and 29% spending less​​.
5. Growth in Health and Transport Spending: There’s been a significant increase in spending in specific categories. Transport expenditure rose by 13.4%, and health-related spending increased by 10.8%, indicating shifts in priorities and needs​​.
6. Focus on Value for Money: As inflation continues, 48% of consumers are buying less, focusing on functional needs over experience. Value for money has become a key priority across various spending categories, from food to home goods​​.
7. Increased Online Price Checking: Approximately 60% of consumers are now checking prices online more than ever, a 10 percentage point increase from November 2022. This trend signifies the growing importance of digital platforms in consumer decision-making processes​​.
8. Preference for Deals and Discounts: A considerable number of consumers (56%) are hunting for deals and discounts, up 8 percentage points from November 2022. This trend highlights the changing shopping habits in an inflationary environment​​.
9. Sustainability and Locally Produced Products: There is a growing interest in sustainability, with 35% of consumers shopping more for locally produced products and 30% for environmentally-friendly products. This change indicates a shift towards more conscious and responsible consumption​​.
10. Deferred Purchases Amidst Economic Pressures: A notable 50% of consumers are deferring purchases until sales or special deals, and 43% are deferring purchases indefinitely. This trend reflects the impact of economic pressures on consumer purchasing decisions​​.

Summary

In the upcoming 2024 landscape, key trends are shaping the Australian market.

Home loan trends show a surge in digital lending, a growing reliance on mortgage brokers, a notable shift towards refinancing, and altered borrowing power dynamics. Property market dynamics are characterised by fluctuating house prices, resilience in certain areas, increased demand for urban units, and regional markets surpassing major cities. Consumer behaviour is shifting towards more price-conscious spending, with noticeable changes in retail sales, rising costs influencing purchasing decisions, and a heightened focus on getting value for money.

For tailored guidance or further information on navigating these evolving trends, don’t hesitate to reach out to a mortgage broker like myself. With my extensive industry experience, I am here to help you make informed decisions.

*Disclaimer: The information provided in this blog is for general informational purposes only. While I endeavour to keep the information up-to-date and correct, I make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. For specific advice tailored to your situation, please consult a professional such as myself.