Investing in property? Here’s what’s shaping the market in Australia.

The Australian property landscape has always been marked by peaks and troughs as the economy shifts and demographics evolve. In this dynamic market, property investors are always on the lookout for emerging trends that can shape their investment strategies and yield optimal returns.

Here are five key trends that are influencing the property investor market in 2024.

High interest rates and taxes prompting investors to sell

With interest rates at a high, we’ve seen more investor activity in the market, both selling and buying. Certain investors, particularly those with highly leveraged portfolios, are selling to avoid escalating debt obligations, land taxes or costly maintenance. Others are reaching retirement and liquidating as they don’t expect much more capital growth in the short term.

While this trend may lead to increased supply in certain segments of the market, it also presents opportunities for investors to acquire properties at potentially lower prices which leads us to…

Big picture investors buying while the market is down

Despite the challenges posed by high interest rates and taxes, cash-rich investors are adopting a long-term view and capitalising on the downturn in the market. Recognising the cyclical nature of the market, investors are seizing the opportunity to acquire properties at discounted prices looking to reap the rewards when conditions improve.

According to Red23 Director Bernard Eid, “Savvy investors are looking to gain from this low in the market because it’s not going to last forever. We’re seeing rental yields of over 5 per cent and there’s going to be some decent capital growth coming in the next two years.”

Appeal of short-term rentals

The popularity of short-term rental platforms like Airbnb continues to soar, driven by changing consumer preferences and the desire for unique travel experiences. Short-term rentals offer investors the potential for higher rental yields compared to traditional long-term leases, boosted by capitalising on seasonal demand.

The short-term nature of these rentals also allows investors to keep their properties clean and assess maintenance requirements on an ongoing basis before any damages become costly. While there are several cons to short-term rentals including administration time, cleaning costs and unpredictable vacancies, the profitability is highly appealing.

High demand for rental properties

Australia has faced a rental housing shortage for several years driven by population growth, immigration, urbanisation, and changing lifestyle preferences. As home ownership becomes increasingly out of reach, many Australians have no option but to rent. All these factors have led to stable rental income for property investors. 

A strong rental market can also drive up property values resulting in long-term capital gains that enable investors to build wealth and hedge against inflation.

Scarcity and cost of land driving popularity of apartments and townhouses

The scarcity of land coupled with soaring land prices is driving the popularity of townhouse apartment living. With limited space for new developments, investors are choosing to focus on medium and high-density projects. Townhouses and apartments not only offer more affordable entry points into sought-after markets but also present opportunities for capital growth and rental income.

While challenges such as high interest rates and land scarcity pose potential hurdles for investors, there are also opportunities for those willing to adapt and capitalise on emerging market trends. By staying informed and adopting a strategic approach, property investors can navigate the evolving market landscape and exceed their investment objectives.

About Red23

Red23 is a leading sales and marketing partner for new land, townhouse and apartment communities across the eastern seaboard of Australia. We specialise in custom and data-driven strategies that turn prospective buyers into proud owners and help build thriving communities.

Since opening in 2007, we’ve built strong and lasting relationships with Australia’s leading developers and become a natural extension of their teams. While our clients have diverse projects, they all want the same thing - an agency that will pull out all the stops to deliver exceptional results.

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