Investors urged to get on board for rent, capital growth in 2024
2024 shapes up as a year for the property investor, with population growth driving higher rents and continued real estate price growth.
As a year ends and a new one begins, it is always timely to reflect, take stock and most definitely plan the forward journey.
As we reflect on a year, so often we see the opportunities missed and frequently through procrastination, sometimes through uncertainty and most definitely for so many a question of doubt.
Good decision making is so much around operating from context and not from content. The confusion is always in the content.
From a property investment perspective, the context is quite simple. For years prior to the current surge in population growth, we were simply building less properties each year than the number of residential properties needed to house our population.
The foundation of the current rental crisis was brewing, however, it was exacerbated by the changes in the make-up of households as a result of the pandemic and through huge population shifts caused by a great deal of migration within Australia and now international immigration.
At the same time as this huge growth in rental demand, we have actually been reducing the supply.
Through the natural events in life such as death, divorce and change of circumstances, there has been a constant volume of existing landlords who have had to sell over the past three years.
We have not seen the normal replacement of exiting investors with new investors because of the battle between owner-occupiers looking to buy properties and investors. Owner-occupiers almost always win as they will pay a premium.
Sadly, as a result of the rental crisis, many poorly thought-out proposals aired in the media.
Ideas such as a national rental freeze, vacancy tax on empty premises and the like.
There were even attempts by some state governments to increase land tax as a pure revenue grab. But at the end of the day, this turned out to be a lot of posturing and common economic sense prevailed and decision makers saw that these would be disincentives to landlords, which means they never got off the ground.
2023 opportunities are gone but investors eye 2024
So, as we enter 2024, the context remains the same. An acute shortage of properties and a dire need for more investors to enter the market.
While many potential investors wait to see if there are any government incentives put in place, the reality is that property values have continued to rise.
Had potential property investors not procrastinated six to 12 months ago, but instead bought, they would have benefited from tremendous capital gains this year as well as ever-increasing rents.
Combined capital growth and rental growth yields for landlords have never been better and are set to continue.
You just can’t defy market forces. Population growth is with us for years to come as it has been for over 30 years.
Construction levels will not see any improvements of significance in the next five years.
Those two market forces will see investment properties continue to produce the best returns for any investor.
Yet, 2024 will be another year that so many potential investors will procrastinate as they get caught up in small content items and lose the bigger picture and all the opportunities that go with it.