Australians will ‘continue to feel the pressure’ of property in 2024

Arjun Paliwal, founder and head of research at InvestorKit, reflected that “2023 has been a challenging year for the Australian property market, with renters, owner-occupiers and investors all feeling the punch”.

He noted that an unfavourable investor environment, driven partially by increasing regulatory restrictions and rate hikes, has driven the country’s stock shortage.

“At the heart of our current housing crisis are fundamental supply and demand issues,” said Mr Paliwal. “To begin addressing supply issues, we need to encourage active market participation, including from investors.”

Looking into the new year, Mr Paliwal forecasted that Australia’s housing market will begin to recover, with the InvestorKit founder expecting rate cuts to begin in Q3 2024.

“As inflation becomes under control and consumer confidence is regained, housing demand is expected to increase,” he shared.

For investors, Mr Paliwal noted that affordability will continue to drive popularity, with buyers seeking out affordable locations that offer robust rental yields.

“There will be attractive opportunities for investors in 2024, but it will require thinking outside the top capital cities and a data-led approach to identify top performers,” he said.

Throughout 2023, rents have soared to due record low vacancy rates, and Mr Paliwal expects this trend to continue into next year.

Internal and overseas migration, declining household sizes, lack of social and affordable housing, and subdued investor activities are all factors that Mr Paliwal cited as potential contributors to this ongoing trend.

However, the most significant price driver in Mr Paliwal’s eyes is supply shortage. He stated: “Over the past three years, there has been a 30 per cent decline in houses for sale across the country and we do not expect to see a quick recovery in 2024.”

Low building approval rates and construction challenges have created an expected shortage of over 100,000 dwellings to 2027, according to the InvestorKit founder.

Finally, Mr Paliwal revealed that regional migration is expected to remain strong over the next 12 months, with priced-out city dwellers continuing to seek out a better quality of life in regional areas.

“Next year, the opportunities may be found where you least expect and robust research, swift action, and expert guidance will be key to unlocking them,” he concluded.