Buyer interest 'higher and earlier than usual' in 2024

The property market's summer holiday slumber is over and things are kicking into gear after an unusually active January. 

While the data shows some markets softening in recent months, on-the-ground perspectives reveal that there's more to the story and in many cases, prices are still on the up. 

We spoke to leading Sydney buyer's agent Michelle May about how 2024 is shaping up so far, where demand is strongest and weakest, and what to expect from the year ahead.

Buyers are getting a head start on the New Year action

Australian real estate typically takes some time to return to full speed after the end-of-year shutdown, but May has seen things ramping up more rapidly than expected. 

"We've had a really big influx of enquiries — it's been higher and earlier than usual," she said. "There is a contingent of buyers who want to be ahead of the market."

Her clients span first home buyers, upgraders, downsizers and everything in between across different price brackets, and there's been competition across the board. 

"Every single one of those inspections is filled with buyers queuing to get into apartments and houses. Definitely, there's a lot of excitement."

Record levels of population growth, a lack of rental security, and fears of the market becoming completely out of reach are all driving factors of the strong demand May is seeing. 

And the competitive environment is driving prices higher still. 

"I did an auction last Wednesday in Banksia for a freestanding house. We had to go 5 per cent over what the comparable sales were saying to get it across the line," she said. 

"I've got irons in the fire with some other properties and that seems to be where we need to be to be competitive. That in and of itself is indicating that the rising market is actually happening."

Quality listings are still in short supply

While there's strong depth in the buyer pool, the shortage of stock that characterised much of 2023 has continued in particular segments of the market. 

Rising listing numbers have been largely driven by investors selling up, particularly in areas with an oversupply of newer apartments. 

"If you're looking for a newer apartment and you're open to higher density, there's plenty of choice," May said. 

These rapidly developed locations where "new properties are popping up like mushrooms" are a risky proposition for buyers, with many cases of shoddy builds being covered in the media. 

But, for quality homes that appeal to families or downsizers, there's "not as much stock as we would like to see from a buyer's perspective."

Australians are staying in their homes longer and longer, often opting to renovate instead of move, and that reduction in housing turnover is helping to keep a lid on supply. 

So, while data may be showing that listings have increased in markets like Sydney and Melbourne, genuinely desirable stock for owner-occupiers is still in short supply for such a strong buyer pool.

What buyers are looking for in 2024

If new, high-density builds are a less attractive prospect for buyers, what's drawing the most attention?

Houses continue to draw major interest but May explained that, particularly since the pandemic's work-from-home boom, a third bedroom is in especially high demand regardless of the property type. 

"For three-bedroom apartments, there's a massive shortage. And the increase is only going up and up because the disparity between units and houses has been going up," she said. 

Young families are looking to graduate from two-bedroom apartments while downsizers are seeking conveniently located three-bedroom units or low-maintenance townhouses, making that pocket of the market especially competitive. 

Established unit stock is also drawing a lot of interest from savvy buyers. 

"We're not going to go for the swanky apartment with the new kitchen and the ensuite, we're going to go for the 70s red brick stuff which is far safer to go for," she said. 

"It's not sexy — you may have to walk up to the second floor — but it's not poorly built. It's going to continue to increase those apartment prices."

What's ahead for 2024?

Several market-driving factors have carried over from 2023 including historic population growth and a lack of new developments to remedy a widespread lack of supply. 

With that in mind, May said "I don't see demand really declining this year."

One key difference moving forward will be the influence of interest rates. Where last year there was the ever-present fear of another rate hike, in 2024 the conversation will be around when we can expect rate cuts. 

"I think that spring is going to be a very interesting time. That will depend on interest rates. If rate cuts happen too late in the year we might actually be doing deals on Christmas Eve," May said.

Once those expected cuts do finally arrive, we could see a fresh influx of buyers, potentially to be met with a wave of new listings.

Until then, May sees a broad upswing continuing but cautioned that doing thorough local research is vital.

"I don't think there's any way you can speak of the market as one whole. There are micro-markets and segments in those markets with houses and apartments," she said. 

"But I think as a whole, prices are going to continue to rise."