4 critical factors why property prices will increase and why you need to BUY NOW!
Australian property is one of the most talked about topics there is. Since the rate rises that commenced in the first half of 2022 mainstream media have projected doom and gloom that continues to scare individuals.
Many are sitting on the fence waiting to see where rates end up and are falling for the negative sentiment the media are intentionally trying to create. Fear for mainstream media is viewership and that is what they thrive off to be successful.
There are many factors that they ARE NOT talking about. These factors WILL see price growth continue in a number of locations around Australia!
Since the rate rises we have had clients achieve 20% growth in this time, we understand the true fundamentals at play.
Let’s discuss a couple of these factors now, and why this will mean growth in the future.
Australia’s Population is increasing
It is estimated that the Australian population will grow to 31,433,00 by 2041! The Australian population forecast for 2023 is 25,981,000. This means another additional 6 million people! These additional 6 million people will need to live somewhere, and with an already massive shortfall of properties this will result in high demand, with low supply levels.
High demand and low supply levels leads to one thing… GROWTH!
Massive construction delays and increase to construction costs
Due to the massive increase to construction costs there are many developers that have gone bankrupt, or they are holding off on planned construction due to their margins being affected.
This means that new builds and further supply being added to the market will be lower than anticipated.
This again is only going to affect the supply being added, yet the population growth still occurring. Low supply, high demand. This will only lead to one thing…. GROWTH!
Percentage of investors
According to the ATO there are approximately 2.05 million property investors in Australia. Just 8% of the Australian population are property investors with the population at 25 million currently. And 71% of those investors hold just one investment property.
This statistic right here is part of the reason why vacancy rates are at all time lows and why rental income is increasing! Only 8% of the population are providing rental properties for renters!
Landlords can help solve this issue, and if you can separate yourself from the majority you’re going to do extremely well!
National housing vacancy
As per SQM research as at December 2022 the national vacancy rate is 1.3%. This level is considered a crisis and due to the supply being so low with demand being high this is pushing rental income growth higher!
Now if the population continues to grow as predicted and mentioned above, and construction is delayed or pushed back this vacancy rate is going to remain low.
This means as an investor you will have a high amount of demand for the product you are offering to the market, reducing vacancy periods and attracting a high quality tenant with many options. Not to mention the rental income growth that you’ll receive, creating passive income long term.
Vacancy rates are a precursor for growth. As rental income increases more renters will become purchasers. This creates more sales activity and demand pushing prices higher.
In summation, these are just 4 factors that will see growth into the future. If you couple this with having a strategy in place and targeting the right city in their growth cycle, you are going to increase the performance and results! This is super powerful as it will result in creating that equity you are able to leverage into further purchases!