Terry Ryder: no better time for investors to make their 2024 move
API Magazine's newest columnist, Terry Ryder of Hotspotting, says property investors who have been sitting on the sidelines should get into the game, with the real estate market set to take off in 2024.
While there is evidence of reluctance by investors to get into the market, I see now as the ideal time to invest in real estate.
There’s “a perfect storm” of scenarios impacting the real estate market and they’re overwhelmingly favourable for property investors and future property price growth.
While usually the term “a perfect storm” refers to a highly negative scenario, in this situation it’s a positive one, especially if you are a property investor.
Real estate markets are being impacted by a well-entrenched imbalance between supply and demand – and it’s becoming increasingly pronounced.
We still have a shortage of listings of properties for sale, despite the Spring surge, and we are still building far too few new dwellings.
There continues to be a serious undersupply of homes available for rent as demand for properties rises, boosted by record overseas migration.
According to the Australian Bureau of Statistics our national population growth rate is at its highest level in 20 years and net overseas migration in the year to March 2023 is the highest on record.
The demand for rental properties is not going to ease any time soon - indeed we are soon to enter another traditionally busy time of the year for relocation – December and January.
And there’s little prospect of housing shortages being addressed given the lack of meaningful action by politicians and the problems in the building industry.
In Perth for example, the number of homes listed for sale is at its lowest level in 30 years, in Sydney listings are 6.5 per cent lower than at this time last year and in Brisbane it is 12 per cent.
That’s what makes it such a good time to be a property investor.
Finding a tenant has never been easier, national vacancy rates hitting a record low 1 per cent in September and median asking rents increasing by 16.2 per cent in the past 12 months.
Even after numerous interest rate rises, rates are still historically low and the majority of investors should be able to afford their mortgages based on increasing rental returns.
Investors who worry that prices have increased too much to get into the market are looking in the wrong spots. There continue to be plenty of locations that offer affordability and good prospects for capital growth.
It may be more expensive to invest now than it was at the start of the year, but when you look back at this period of time in 12 months, you’ll be kicking yourself for not investing when it was “cheaper”.
If you are looking to invest, keep these two important things in mind:
1. Follow the infrastructure trail
Invest in locations where the economy is growing, where money is being spent providing better amenity and infrastructure. These are the places that offer jobs that will attract new residents.
2. Look at transaction patterns
Locations that have steadily rising levels of sales transactions, quarter after quarter, are the locations in demand. Steady, lifting sales numbers are often a precursor to property price growth.
I’m not the only one predicting a strong finish to 2023 and a solid start in 2024.
From the doom and gloom scenarios at the beginning of the year, many economists have backflipped and are now tipping further price growth.
Accountancy firm KPMG has forecast that prices nationally will rise about 5 per cent from now until June 2024 and then 9 per cent to 10 per cent in the 12 months to June 2025.
If you are ready to invest, don’t put it off. Property is a long-term game and if you buy right, you’ll reap the rewards.