2023 has been a year full of challenges (and opportunities). As we approach end of the year, Formation Finance Partners would like to thank you for your ongoing support.
Looking ahead into 2024, we see strong positivity in the property and lending markets for three key reasons.
1) Strong property fundamentals
All states and territories had positive population growth in 2023 with an average growth rate of 2.2% (563,200 people). The positive population growth trend is forecasted to continue into 2024 which underpins demand for property.
The supply of new housing is still restricted although construction costs and risks seem to be stabilising. National residential vacancy rate is very low around 1%.
2) Tax cuts
The stage three tax cuts were legislated to start on July 1, 2024. They will abolish the 37% bracket that applies to income between $120,000 and $180,000 and apply a 30% rate to all earnings between $45,000 and $200,000, covering 95% of workers. These tax cuts will put more cash back to the households and property market participants.
3) Cash rate cuts
The money markets priced in three rate cuts (0.75%) to the US cash rate in 2024 and it is widely believed that Australia’s cash rate will reduce by at least 0.25%. This would not only benefit asset valuation and borrowing capacity, but also instil confidence in the property and lending markets.
As we look forward to 2024 full of positivity, we wish you and your family a Healthy, Wealthy & Happy New Year.
