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10 insights into the investment property market
Insurance insights

10 insights into the investment property market

02 Apr 2024 7 mins read

In recent news, housing affordability hit its lowest level in 20 years, rents climbed again, values rose for 90% of housing stock, vacancies hit a record low and Victoria set up a taskforce to crack down on dodgy rentals while SA looked to establish a tenant advice service. Each month we pull together 10 insights impacting the investment property market. Read on for this month’s instalment… 

  1. Rental affordability at worst level in almost two decades. According to PropTrack’s Rental Affordability Report, rental affordability hit its worst level in at least 17 years. Between July and December 2023, just 39% of the rental properties advertised on realestate.com.au were affordable for a median-income household (about $111,000) spending 25% of their income on rent. Even households with an income of $170,000 were not able to afford every rental property, while those with an income of $49,000 were not able to afford any rental properties. Meanwhile, research from the Australian Housing and Urban Research Institute found the number of high-income households who choose to rent was on the rise, while lower-income renters were under more financial stress than ever before.

  2. Rents continued to climb. Capital city asking rents rose 1.2% in February – rising 0.8% for houses to a median of $834 p/w and by 1.6% for units to a median of $622 p/w – according to SQM Research. REIA’s Real Estate Market Facts for the December 2023 quarter showed rents for 3-bedroom dwellings recorded a quarterly increase of 2.6% and an increase of 13.4% in the past year to sit at $585 per week.

  3. 90% of homes saw values rise. According to CoreLogic’s interactive Mapping the Market tool, 88.4% of the house and unit markets analysed nationally saw values rise over the year. Over the past 12 months, CoreLogic’s Home Value Index had risen 8.9%, adding the equivalent of approximately $63,000 to the national median dwelling value ($765,762). Property prices reaccelerated in February, with PropTrack’s Home Price Index revealing national prices rose 0.45% month-on-month – the largest monthly increase since October 2023. Data from My Housing Market showed the national capital city median house price increased by 0.8% over February to $1,094,943, while the national unit price rose 1.1% to $632,251.

  4. Vacancies hit record low. The national vacancy rate dropped to a record low of 0.7% in February, according to Domain’s Rent Report. Perth and Adelaide had the tightest markets, with a vacancy rate of just 0.3%, while Darwin had the least competition, with a vacancy rate of 1.3%. Figures from SQM Research showed the total number of rental vacancies Australia-wide stood at 30,161 residential properties in February, down from 32,108 in January.

  5. Money matters. At its board meeting on 19 March, the RBA decided to leave the official interest rate on hold at 4.35%. According to REIA’s Housing Affordability Report for the December 2023 quarter, mortgage holders were spending 45.5% of their income on loan repayments. Westpac’s Home Ownership Report found 44% of Australians plan to buy a new home in the next five years – increasing 9% since July 2023. The number of investors planning to buy was also up 6%.

  6. Investor news bites. A poll by RedBridge found that only 22% of respondents were in favour of maintaining investor-friendly tax settings, while 58% supported limiting or abolishing negative gearing and the capital gains tax discount. Data from the ABS showed the number of new loans to investors fell 2.6% to $9.21 billion in January. CoreLogic crunched the numbers and the Women and Property 2024 report found 14.1% of males own at least one residential investment property compared to 12.5% of females. LJ Hooker Group identified the top 10 investor markets, based on rising prices, low days on market and increasing yields. Hotspotting revealed the National Top 10 Positive Cashflow Hotspots. API Magazine reported on Australia’s best property options for under $500,000. The ATO is investigating more than 16,500 SMSFs that allegedly reported certain classes of assets at the same value for at least three income years. These assets include residential and commercial property, unlisted companies and unlisted trust investments.

  7. Government beat. A new taskforce was established in Victoria to oversee the conduct of those managing rental properties (landlords and PMs). Minister for Consumer Affairs, Gabrielle Williams, said the taskforce would target offences like false advertising, renting out properties that don’t meet minimum standards, and not lodging bonds. SA Government is looking to establish a tenancy advice and advocacy service. The state also issued a warning about “rogue tradies”. NSW Government released the findings of its survey on proposed rental reforms. Queensland Government pushed ahead with its rental reforms, introducing a Bill to Parliament which will ban rental bidding, establish a portable bond scheme, and protect tenant privacy, among other reforms. REIQ called the new reforms “unworkable”. REIV called on the State Government to review its property taxes to help incentivise investors to stay in the rental market. NSW Government began its review into compulsory private land acquisitions. WA Government rolled out its new planning system on 1 March 2024. Victorian Government extended the Liquidated Builders Customer Support Payment Scheme.

  8. Rental markets can’t keep pace. Immigration levels reached a 70-year high, putting Australia’s housing supply under extreme pressure. According to the ABS, 2,098 new people arrived in Australia each day in the 12 months to September, but new home construction and rental markets can’t keep pace.

  9. Legal corner. Following a home on Sydney’s Northern Beaches burning down while the agent was preparing for an open home to sell the property, the agency was found liable for negligence. The agency was ordered to pay the property owner $740,842.93 plus interest, while the tenants were awarded upwards of $120,000 collectively.

  10. Did you know? From 30 April 2024, security cameras inside Airbnb properties will be banned and more comprehensive rules around outdoor cameras and other devices come into effect.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions. 

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