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Apartment market in 2024

Apartment market in 2024

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What will happen in the Apartment market in 2024? We dig into rents, values, supply, immigration, land tax, government intervention and more.

As 2023 fades in the rearview mirror, the most defining experience of the market was a dead heat between

  1. A sharp jump in rent
  2. The rise and rise of interest rates.

Rents started 2023 recovering the decline during Covid but then kept going… and still are.
We all know what happened to interest rates.

Now we look to 2024 and explore the issues that will impact the Apartment market next year.

Rental growth

Every indication is that rents will continue to rise through ’24. In CBRE’s Apartment outlook report in October ’23 they forecast rental growth of over 30% in some precincts. The way it’s going they may well be right.

While the federal government is starting to temper migration into Australia it will most likely remain above pre-covid levels. This will ensure demand for apartment rentals remains strong.

The rental market traditionally jumps up in Summer and then plateaus through Winter. In 2023 however, it powered through Winter and has continued through Spring. I expect the same will happen in ’24.

Sale values

All the indicators point to a jump in apartment values over the next 5 years. It’s hard to know when and how much each step will be over that time.

We have been expecting the fever pitch demand for apartment rentals to bubble over to the apartment sales market. The private investment market for apartments remains cautious but that can change quickly if rental growth starts to make the return profitable.

Factors to watch in 2024 include job security and the cost of debt.

In a very positive sign for the apartment market, institutional investor Dexus purchased 120 completed apartments in late ’23 as part of a closed end opportunistic fund. The Dexus acquisition
follows the purchase of 125 existing apartments by Apollo backed property financier MaxCap Group in May ’23.

These institutional and high net worth investors hold the view that apartments are undervalued and will provide good capital return over the term of the fund.

Interest rates

Forecasting what happens to interest rates in 2024 is well above my pay grade. Even the experts can get it wrong.

Regardless of the actual rate, some level of certainty and stability would be helpful in building confidence in the sales market.

Deferring to the experts, they agree the impact of previous rate rises is yet to be fully felt. Any additional rate rises, risk tipping the economy over into a recession. Following the December RBA
meeting Governor Bullock said, “The impact of the more recent rate rises, including last month’s will continue to flow through the economy”.

The new RBA meeting schedule is every six weeks instead of every month. This means with only 8 RBA meetings in 2024 we won’t need to hold our breath in anticipation on the first Tuesday of every month anymore.


Strong net overseas migration (NOM) has kept Australia’s economy in the black in 2023. Australia has seen NOM of over 500,000 in the year to Sept ’23.

Economically migration created a positive GDP. If you strip out the economic impact of NOM, Australia went in to a ‘per capita recession’ in ‘23. High NOM has been great for the economy but problematic for the rental market.

We know almost all new migrants rent when they first land in a new country. This population injection has turbo charged the rental market.

The government has undertaken to reduce NOM. They forecast it to be 375,000 and 250,000 for the twelve months to June 2024 and 2025 respectively.

For the four pre-covid years of 2016 – 2019 NOM was between 240,000 and 250,000 each year.

It is possible that as the housing issue subsides politically, the government will turn the immigration tap back on.

New supply

Expect new apartment and detached housing to undersupply again in ’24.

As discussed in articles throughout the year, there is very little supply of new apartments and housing generally. Certainly not enough to meet current and future demand.

You may recall the Victorian Government announced in September an ambitious (some suggested unrealistic) plan to create 800,000 new homes over the next 10 years.

There are several challenges to that plan including;

  • High cost of construction
  • Labour shortages
  • Subdued ‘off the plan’ investor market (required for new large apartment developments)
  • Town planning delays and uncertainty

There is apparently work being done to remove some of those blockages but there are broader market issues outside the government control, as well as the physical or logistical reality of building that many new homes.

Government changes

The housing market and “rental crisis” is a hot topic and gets a regular run in the media. The Government (both state and federal) often feel political pressure to fix it. Unfortunately, as we all know, it is not that simple.

There was a announcement by Dan Andrews before he departed about tweaking rental rules, but we haven’t seen anything eventuate. Maybe that plan left with him but let’s see.

The apartment sales and rental markets operate best when there is certainly. The property market is a long-term play, so the less government changes the better.

The next State and Federal elections are November ’26 and mid ’25 respectively so that should minimise the chances of changes in ’24.

Land Tax

The new land tax changes for Victoria come into effect on 1 st Jan 24.

You can read all about the changes in my article from June.

This will see some apartment investors getting hit with land tax for the very first time as the land value threshold drops from $300,000 to $50,000.

Unfortnately, many owners will have no choice but to pass this cost on to renters in the form of higher rent.

Build to Rent

The ‘Build-to-rent’ (BTR) sector has been hailed as a savour to the rental shortage. It will help with some supply but it’s only a small part of the equation.

CBRE forecast by 2028, BTR projects will only comprise about 9% of new apartment supply.

BTR is also targeting the upper end of the rental market with additional services, amenities and flexibility.

If anything, BTR will drag rental rates up as they set asking rents above the general market.

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