2024 property market outlook for investors - Part 1

In the first of a two-part series, we examine the supply and demand drivers in the rental market, the impact on property prices and offer insights for investors.

It’s a unique time across the many property markets in Australia. Investors are enjoying stronger than ever rental yields, and with migrants arriving in record numbers, the demand for housing shows no sign of abating.  With so much happening it pays to keep a close eye on the market if you are a property investor or looking to become one.

Here’s our key insights into where the Australian property market is at right now, followed by our top investment opportunities for 2024, revealed in part two of this article.

The key points

Where are we now?

Interest rates and inflation

The Reserve Bank increased interest rates four times in the first half of 2023 (0.25% each time) in an attempt to curb inflation. This strategy appears to be working with Australia’s inflation rate dropping, but the Reserve Bank’s inflation target is between 2 and 3%, so there is still a way to go.

Record migration numbers

Over 500,000 people migrated to Australia in 2023. This is a record in our history, and the spike was led by international students and working holidaymakers. They are contributing to the strong demand for rental properties, especially in key locations like major capital cities.

Looking ahead, Australia’s population is tipped to rise to over 40 million within the next 40 years, so the strong demand for housing is a long-term trend.

Limited availability of rental stock has caused low vacancy rates and higher rental prices. This tight rental market has impacted property values, driving them upwards

The strong rental market & property prices

Limited availability of rental stock has caused low vacancy rates and higher rental prices. This tight rental market has impacted property values, driving them upwards in key locations, as they have done for the past few years, despite a global pandemic and significant interest rate movements.

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In summary

Investing in property is for the long-term, whereas interest rate fluctuations occur frequently (both up and down). The higher interest rates we’re currently experiencing will go down, and, importantly, investors in the market will continue to receive record high rents, every week.

Looking at the bigger picture, those that buy in the right areas - at the right time - will also benefit from capital growth as their property appreciates. This leads us to part two of the property investment market outlook, where to invest in 2024.

Other sources
RBA Rate Tracker

NAB webinar, October 2023
ID Webinar, October 2023
CoreLogicHedonic Home Value Index, November 2023

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