Property investors and landlords will continue to thrive next year as the market continues to be in their favour.
Aspire Advisor Network founder and managing director Richard Crabb said there are five factors that point to a landlords’ market in 2023.
“Increased market opportunities and strong rental growth set to attract more investors next year,” he said.
“I believe it is definitely a ‘landlord’s market’ for the foreseeable future.”
1. Rising interest rates
Mr Crabb said the increase in rates would help landlords gain dominance in the market.
“As landlords enjoy the tax deduction buffering from the full interest rate rises, it does not affect investors to the same level it affects homeowners,” he said.
“Removing first-home buyers and their FOMO buying have increased opportunity for investors.”
2. Land supply
The amount of land released to investors has been on the minimal side over the last couple of years, as new land estates were focussed on delivering supply to the first-home buyer markets.
“The severe weather conditions in New South Wales and Queensland and the resulting wet ground have slowed up production of new lots and stages, resulting in a further deficit of available opportunities,” Mr Crabb said.
3. Construction costs
The combination of uncertainty and increasing costs in the construction space has presented challenges to the housing market.
Still, conditions remain in favour of landlords as most of the challenges seen over the recent years start to ease.
“We are now seeing a lot more certainty returning to the market with our builders begin able to secure longer term supply pricing contracts,” Mr Crabb said.
4. Record-low vacancy rates
With the continuous surge in rental demand, the national vacancy rate has reached a record-low of around 1%.
Most capital cities even recorded sub-1% vacancy levels. Only Canberra, Melbourne, and Sydney reported vacancy rates that exceeded 1%.
“To put this in perspective, a balanced market is 3%,” Mr Crabb said.
5. Migration growth
Australia is actively looking for more workers from overseas and this would result in an increased demand in housing.
Over 200,000 migrants per year are expected, which would put more pressure on rental markets.
“Rents will rise – providing an inflation-proof investment – making it either harder or more important for home buyers to get their foothold on the ownership side,” Mr Crabb said.
Photo by 89Stocker on Canva.