Investors unaffected by interest rates are in a favourable position to take advantage of the market
The residential property market in March continued to be impacted by various influences that make it sway from one end to another, according to a report by independent property valuation and advisory group Herron Todd White.
In its “Month in Review March 2024” property report, it was found that amidst the influences affecting the residential property market, it has seen “pedestrian levels” of growth across major markets in Australia, with the exception of Perth.
“2024 continues the post-pandemic trend of multiple competing influences trying to shift both national and local property markets in various, and sometimes opposite, directions,” said Ben Esau, national director of residential at Herron Todd White.
“As we look forward, 2024’s inflation numbers, interest rates and unemployment figures – along with high immigration levels – appear to be the key metrics to watch as they could sway current demand imbalance and/or purchaser confidence one way or another,” said Esau.
Esau said that individual households continued to be burdened by the cost-of-living pressures as well as the discussions of a per capita recession. Also adding to this is the increase in unemployment.
While the rise in immigration numbers in the previous year has continued its support for the economy, it was also found to add to the pressure to housing demand throughout the country.
Esau said that as the levels of migration in 2024 will be influential to the market’s movement, investors have been noting how such factors provided short-term opportunities and possible downsides that should be monitored.
“Strong immigration has supported record rental growth and low vacancy rates. Subsets of immigration can have a marked effect on particular locations,” said Esau.
He further noted that investors who were not quite reliant on borrowing funds and were unaffected by the rising interest rates are currently in an advantageous position.
“These buyers certainly aren’t having any trouble securing tenants in most markets. Should interest rates start to drop towards the end of the year, a wider buyer pool with increased buying power will add to the competition, including some purchasers who were previously forced to rent,” Esau said.
“For those already holding investment properties, continued limited supply could create a windfall as the cost of servicing loans reduces without an accompanying reduction in achievable rent.”
Esau said that bringing in new houses to the market that can meet the demand seemed to be limited in the short term as the building sector continues to recover from the increases in costs.
With the imbalance between supply and demand, Esau said that the market will continue to be a favourable environment for investors so long as the market sees no mass net migration exodus or sudden increase in new housing.
