(May 2024 Blog) Australian Property Market Gains Momentum
The Australian property market is displaying renewed vigour, but it's not a one-size-fits-all situation. While there’s certainly opportunity, strategic selection is crucial for investors.
Despite interest rates having climbed over the last two years, research from Westpac1 shows that a large portion of the population, around 60%, are still committed to buying property within the next five years.
This sustained interest suggests the market's potential for significant capital growth remains robust.
Population boom meets building lag
Property values have grown consistently, with CoreLogic’s2 2023 index showing an 8.1% increase compared to the previous year’s decline of 4.9%. This growth coincides with an imbalance between supply and demand.
Australia’s population surged 2.5% by September 2023, according to the Australian Bureau of Statistics3, while building approvals4 dropped 23.9% in the same year. The Centre for Population5 forecasts a steady 1.2% annual growth rate until 2034.
Additionally, February6 2024 data shows building approvals remained low, with a concerning 5.8% year-on-year decline. This undersupply is likely to continue pushing property values upwards.
Selective opportunities
PropTrack7 reported a busy February, with 16.6% year-on-year increase in new listings on realestate.com.au. While this means there are more opportunities for buyers, it presents an even better opportunity for clever investors to be picky, looking for high-quality properties with good potential rental yield.
The key is to focus on A-grade properties. These are in desirable locations with high rental demand and good growth of rental rates. An A-grade property should also offer long-term capital growth prospects. So, while there may be an overall increase in stock, the pool of A-grade properties is likely smaller, making them even more valuable for investors.
Seller confidence
The market has seen a shift in seller confidence. This increase means more choices for investors, allowing you to be picky and find properties that best fit your investment goals.
Plus, with more properties on the market, you might find sellers are more open to negotiating, giving you a better chance to strike a favourable deal.
Tight rental market
The rental market is another area to watch. Vacancy rates are at an all-time low in many capital cities, Domain reports8, pointing to a significant lack of available rental properties. This shortage has led to higher rental yields, with both houses and units in the capitals seeing increases of 5.3% and 6.1%, respectively.
By securing an A-grade property, you benefit from not only potential capital gains but also strong rental returns, maximising your investment.
Opportunity for investors
The Australian property market presents a compelling opportunity for investors, but selectivity is key. If your circumstances allow, buying A-grade properties in high-growth locations means you can leverage the current market dynamics to achieve your investment goals.
Looking to buy a quality investment property? As an expert buyer’s agent, A Game Property Advisory can help you secure a quality property at a good price. Get in touch with Jim by calling 0422 446 170 or emailing jim@agameadvisory.com.au.