In the face of rising interest rates and a formidable national housing crisis, property investors are on the lookout for the most lucrative markets that offer strong rental yield and capital growth potential. Leading property investment firm, DPN, reveals in their latest study, the “Property market outlook for Australian investors 2024”, three standout regions poised for prosperity in the coming year.
According to DPN, investors should not solely concentrate on interest rate fluctuations, but must also weigh the pivotal forces of supply and demand within the rental market. The ongoing scarcity in affordable housing at a national level, paired with significant immigration, where over 600,000 new migrants have sought residence in Australia over the past two years, is driving rental performance. “This is almost a perfect storm for investors as this is largely driving rental performance, that is the ability to achieve strong rental yields, which can offset interest rates at this time,” the report notes.
Alex Reithmeier, DPN’s Research Executive, draws on substantial data and experience to spotlight three regions ripe for investment: the City of Wanneroo in Western Australia, the City of Maitland in New South Wales, and the City of Logan in Queensland.
Perth’s affordability particularly stands out, with the City of Wanneroo showcasing a median region price of $576,000, making it a magnetic choice for interstate investors and local families. Reithmeier observes, “You’d have to go back to 2007 to see those prices in the harbour city.” Affirming this insight, he adds, “Above average population growth for WA and skyrocketing rentals make this an appealing market from a capital growth and rental yield perspective.”
Maitland, with its strategic position and a median price of $694,000, benefits from significant infrastructure investments. Alex elaborates, “Benefitting from its proximity to Sydney, young families and first-home buyers are moving up to make house ownership a reality.”
As for Logan, with a tempting median price of $854,000, its location is central to employment and lifestyle, attracting a population spillover from Brisbane and the Gold Coast. “On the face of it, Brisbane is the story of the Olympic infrastructure boom but an undercurrent of persistent interstate migration from the southern states in search of improved affordability and a better climate is fuelling demand for regions such as Logan,” Reithmeier explains.
Facing into 2024, property investors can anticipate no quick resolution to the housing shortage, meaning rental yields will likely remain strong. Estimates suggest that 1.2 million new homes need to be constructed each year from 1 July 2024 to keep up with demand, yet building approvals are dwindling. However, with construction costs stabilising and competition among lenders intensifying, now may be an opportune moment for property finance.
Reflecting on the overarching trends, Reithmeier asserts that the national trajectory of capital growth is set to persevere in 2024. “All indications suggest that with interest rates expecting to level off, a continuation of high levels of immigration and building approval rates throughout Australia decreasing this will all put upward pressure on capital growth rates nationwide.”
He concludes with an optimistic forecast for the discerning investor: “Whether you buy property in Perth, Maitland or Logan, there are sound investments to be had in the current market. And, when the research is done for you, you’re on your way to strong returns in 2024 and beyond.”