The 2024/2025 financial year will bring welcome stability for property investors - with strong demand for rentals and more certainty around the housing market, there’s less volatility in regard to prices and interest rates. These are healthy developments in the Australian property space.
Here's a snapshot on what property investors can expect from the property market in the coming financial year.
Interest rate stability
- We are seeing more certainty around the Australian housing market than we have seen for several years.
- We have reached the top of the interest rate cycle.
- There is a strong likelihood the RBA will keep interest rates unchanged for the next eight to nine months. This is largely due to rents, energy costs and other factors such as July income tax cuts which are all likely to drive upward pressure on inflation, which means the chance of interest rates cuts later this year has reduced.
Rental demand to continue
- Federal government expecting to bring migration down from 510,000 to 375,000 a year by June 2024. These slight reductions in still strong immigration numbers will continue to underpin value.
- Despite this forecasted decline in migration, the rental “crunch” is expected to persist.
- Dwellings will need to be built to house the growing population.
Investment property values to stabilise
- National price movements between a negative 1 to plus 3 per cent for the year.
- Growth rates across Perth, Adelaide and Brisbane remain high.
- In terms of our national capitals, Perth continues to lead the country at an annualised 20.4 per cent, followed by Adelaide at 14 per cent, Brisbane at 10.8 per cent, Sydney slowing to 2.8 per cent and Melbourne has slipped to an annualised negative 0.23 per cent.
- This highlights the very different market conditions nationally and while some areas in particular appear to be performing well, it’s important to understand that the overall rate of growth is continuing to reduce.
Trends in rentals
- We are starting to see an increase in the number of people per household, as more young people move back home or renters go into share house arrangements.
- More development and building approvals to come to support migration levels.
- Properties equipped with solar panels, energy-efficient appliances and sustainable materials are becoming the norm.
- Some investors who are looking to release capital gains in the high interest rate environment, and either reinvest in property in different locations or invest in higher yield bonds.
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