"Here are a few things to pay attention to in the coming months!" - Matthew Lapish, Senior Investment Analyst
Hayden Groves, President, Real Institute of Australia (REIA), has exclusively shared his insight into what he regards as the top ten factors that will shape the property market over the next 12 months.
These ten variables will determine not only how the market performs and thereby guide property investor decision making, but they will also do much to shape our economy and society.
Ten things to watch in property in 2023-24
1. Supply, supply, supply
That’s the key feature of Australia’s property market over the next 12 months and emphasises the subsequent urgent need for all tiers of government to address housing supply in a meaningful way.
Less discussion and more action in delivering housing supply ought to be a major focus of decision makers for the foreseeable future.
2. Sustainable, energy efficient homes
From energy efficiency disclosure at point of sale to improving the efficiency of rental homes, the environmental necessity of improving the sustainability of our homes will continue to frame policy for Australian housing and shape the country’s ability to meet environmental targets.
3. Interest rates
The RBA is likely to pull-back from its efforts to tame inflation in the back half of 2023.
So far, the short supply and high demand market has only temporarily resulted in a downturn in housing prices in the major capitals. The market has rebounded strongly despite the high inflation and interest rate environment.
4. Rental market
With constrained rental supply and high demand from population growth, rents are set to continue increasing over the next 12 months.
Chatter around rent freezes, caps and other policy positions that discourage private investment in residential property would see further deterioration in rental affordability.
5. Build-to-rent
The build-to-rent sector is likely to build in momentum over the next year and beyond, contributing at least some new supply into the rental market.
6. Construction cost and completions
As construction costs begin to moderate and demand fuelled from peak-Covid stimuli slows, building completions ought to help ease some of the supply shortages in the market over the next 12 months.
Builders are likely to remain under pressure from fixed-price building contracts with skinny margins.
7. Mortgage stress
With housing affordability at record lows, thousands of homeowners coming off low fixed rate interest loans for the remainder of 2023 will feel the financial pain of a 35 per cent increase in loan costs since the RBA started lifting rates.
Mortgage delinquency rates will inevitably rise.
8. Data security
With cybercrime and theft of personal data on the rise, real estate agents will need to remain vigilant with the collection and care of their customers’ personal data.
9. Short-stay rentals
With around 140,000 short-stay properties available across Australia, there ought to be closer policy attention paid to this sector.
The surge in short-stay properties since peak-Covid has damaged long-term rental supply and exacerbated the rental crisis.
10. Negative gearing and capital gains tax settings
The Albanese government remains firmly committed to the current property taxation settings despite pressure from The Greens, some of their own backbenchers and even their own advisors.
History shows that messing with these important elements of the housing spectrum crushes supply, further damaging rental supply.
Family investors supply about $3 trillion worth of rental stock in Australia and no government can plug the hole left behind by a mass exodus of investors from that market should policy settings change.
Source: Australian Property Magazine