The year ahead
While markets have rallied, geopolitical uncertainty ensures the road ahead remains bumpy for investors
2 minutes to read
Market conditions are better now than they were a year ago. Inflation appears to be largely under control and the question is when, not if, interest rates will be cut. Labour markets
are solid, forced sellers are largely absent, constrained housebuilding has cushioned prices and pandemic savings have yet to run dry in some advanced economies.
But the geopolitical landscape is precarious. The lights are “absolutely flashing red,” in the words of the UK Foreign Secretary, with a spike in energy prices due to the escalation of conflicts a real possibility. In addition, GDP growth is likely to slow from the levels seen in 2023.
Add to this the biggest election year in history, China’s subpar growth, further trade fragmentation and the looming spectre of climate change-induced disasters, and investors will need to work harder than ever to make informed and timely decisions.
Where’s hot, where’s not?
Auckland leads our prime price forecast, while Sydney is the frontrunner in our rental forecast for 2024. Prime price growth across the 25 cities tracked is forecast to reach 2.5%, up from 1.7% in 2023 with Mumbai, Dubai, Madrid and Sydney joining Auckland to complete the top five. Prime rents are moderating from their post-pandemic highs but a lack of stock in key cities will keep annual growth in positive figures for most advanced economies.
Canada and New Zealand’s restrictions on foreign buyers will push demand towards the rental sector, while high mortgage costs, taxes for landlords and red tape will keep supply in check.
2024 outlook
- Politics will usurp economics as the major downside risk for property markets in 2024.
- Auckland leads our prime price forecast, while Sydney leads for rents.
- Stock levels will be the key determinant of price and rental performance, with rate cuts, taxes and red tape influencing factors.
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