Happy New Year and welcome to 2024! We hope you had a great break over Christmas with your loved ones.
This year we will be getting the monthly newsletter back up and running, we aim to give industry insights as well as credit advise on a range of topics. We encourage all clients to let us know if you would like any particular areas covered as the year progresses.
I want to highlight an article I wrote back in February 2021, This was post Covid, and I explained why I was confident with the Australian economy and Australian Property as an investment class. Click the link to read below.
In 2021, the Australian property market surged by 24.5%! (Source: CoreLogic’s national Home Value Index)
Again, I am very confident that Australian property values will continue to increase in 2024, here’s why:
A chronic undersupply of housing
With labor shortages right across the board and over 500,000 people migrating to Australia from September 2022 to September 2023 (Source: Australian Financial Review), our population is continuing to increase. These people need homes and we already had a housing shortage prior to this!
Once settled, the skilled migrants will look to buy their own family home after a couple of years, which means more buyers for fewer available homes. When demand is greater than supply, prices rise.
Not enough rental properties
Initially, immigrants tend to rent when they arrive in Australia. SQM research reported that the National Residential Vacancy Rate was 1.3% in December 2023. Many of our clients have had 25% weekly rental income increases on their investment properties over the last 6 months. If the demand for rental properties is greater than supply, rent increases.
Expected interest rate cuts later in 2024
I’m hopeful that interest rates have nearly peaked as inflation is now trending in the right direction. Many economists forecast that we may see a decline in interest rates at the end of 2024. When interest rates start to come down it usually increases market sentiment - people are more confident about buying a home or investment property, which again increases demand. Have I mentioned supply and demand enough yet?
The wash up
It is likely you will be paying less now for good quality real estate assets than you will be by the end of this year. So, if you are considering buying a home or investment property perhaps now is the 2nd best time to do be doing so? What’s the best time, you ask? – 10 years ago, 20 years ago, 30 years ago, 40 years ago.
If you, or anyone in your close network is looking to take action in 2024, let's have a chat?
Have a great year!
I’m off to the garage now to get my time machine working properly so I look forward to talking to you all again in the near future (or in the past…)
Michael De George
The information contained within this article has been provided as general advice only. The contents of this email have been prepared without taking account of your individual objectives, financial situation or needs. Before making any decision regarding your financial future, you should consult with your own financial advisor to consider whether this advice is appropriate having regard for your own objectives, financial situation and needs.
Michael De George is a credit representative (477495) of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237).