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January 9, 2024

4 Factors Likely To Influence Toowoomba’s Property Market In 2024

It has been an incredible few years for Toowoomba’s property market, with home values in many suburbs doubling since pre-pandemic levels.

Now, as we move into 2024, should we expect more of the same?

Here are four factors we believe will influence the Toowoomba property market this year.

1. Interest rates could begin to fall

After citing inflation as its number one economic concern, the RBA lifted the official cash rate 13 times over 2022 and 2023. This took the cash rate from the emergency pandemic level of 0.1% to its current level of 4.35%.

In turn, this had the effect of moving the average standard variable home loan interest rate from under 3% to almost 7%.

In the past couple of months, however, there has been good news on the inflation front.

Recent figures show inflation fell from 5.6% in September to 4.9% in October. Construction costs have finally stopped rising so rapidly too, with the price of building a new home lifting by just 4.7% over the year to October 2023 – the lowest rise since 2020.

This gives us hope that interest rates may come down in 2024.

And we’re not the only ones hoping for this. Many economists agree, and the big four banks all expect the RBA to start reducing the official cash rate in the second half of this year, and forecast that nationally, property prices will rise 4-6% across 2024.

That should be great news for buyers, who should be able to afford more. It will also come as welcome news for many existing homeowners, giving them some relief on mortgage repayments.

2. Population growth is set to continue (and building isn’t keeping pace)

We expect Toowoomba’s lifestyle and affordability to attract many more buyers from the large cities this year, just as it has been for some time.

As we’ve already written many times, Toowoomba’s population growth has been one of the key factors behind property prices rising, with the city adding 1.78% over 2022 (the latest data available). That trend is set to continue, with the Queensland government projecting Toowoomba’s population to be over 204,000 by 2041.

But while most of the demand in the pandemic was on the market for first homes and family homes, we anticipate this year we’ll also see more downsizers looking to sell up and move closer to our increasingly vibrant city centre.

This, combined with a growing number of professionals moving to Toowoomba and rural families looking for a central second home, is likely to put pressure on the inner city apartment market.

3. The rental market could drive prices higher

Toowoomba’s rental market has been close to full capacity for some time. The vacancy rate has been below 1% since early 2020, and median rents have been rising.

One factor behind this has been that, when people move to Toowoomba, they often tend to rent before buying. But, what we’re finding is that many of these buyers soon begin to look for a home to buy.

After all, with generous first home buyer incentives on offer, the rent vs buy equation looks in favour of buying right now – even in the face of higher interest rates.

We expect this to stimulate demand in the first-home buyers market throughout 2024.

4. Investors to be a factor

Investors have been conspicuously absent from most of Australia’s property market over the past couple of years. But it’s a different story here in Toowoomba. Strong yields and even stronger capital growth mean investors have continued to stay in the market.

Earlier this year Harristown was named one of the best suburbs for investors anywhere in the country. And, Your Investment Property Magazine named East Toowoomba one of Australia’s ‘most recession-proof’ property markets for investors.

According to CoreLogic, investors in our region can expect an average yield of 4.6% – well higher than in most major cities. Combine that with the outstanding capital growth we’ve experienced since 2020, and you can see the appeal of investing in Toowoomba.

We expect with a growing economy, strong jobs growth and new infrastructure projects being built, investors will remain a factor in Toowoomba’s property market over 2024. We also expect that their competition with first home buyers will drive prices higher in the entry-level market.

Potential headwinds…

Despite our optimism for 2024, no one can forecast the future with certainty and there is a chance prices won’t rise in line with forecasts.

The most obvious risk is that inflation will return or that current economic conditions will deteriorate and unemployment will rise, meaning people won’t be able to afford to spend as much on property.

Our view, however, is that this is far less likely than the scenario we outlined above. Our local property market has proven exceptionally resilient over the past couple of years and has so much in its favour that we expect another strong year ahead.

Want more?

Looking for more advice about the Toowoomba property market? Whether you’re an investor, homeowner, tenant or first home buyer, we’re here to help. Get in touch with our experienced local team today.

Article by Trevor Manteufel

With 19 years experience in selling real estate in Toowoomba & surrounding areas, Trevor is relaxed, approachable & confident, whilst providing you a high level of service, listens to your needs and makes selling your home a positive, and … View profile

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