Executive address

I’ve watched with interest the wide ranging and seemingly endless variety of drivers in play that can potentially affect the property market and housing availability across all population centres. Everything from interest rate movements and legislation through to economic outlook and even international conflict and elections. The demand for and supply of Australian real estate would appear on the surface to be at the mercy of multiple and at times conflicting forces.

As an example, last week the Victorian government provided more details of its proposed legislation for a short-stay rental levy that comes into effect from January 2025 in hopes of inducing holiday-home owners to put their investments back into the long-term rental pool. This is just the latest in a raft of legislation across many jurisdictions geared towards boosting housing supply.

While there will be plenty of observations made about how these and other facets will sway the property market, we think in reality much of these are short-term influences. In addition, many will impact certain sectors of the market only. For instance, I can’t help but ponder on how the market will react immediately when interest rates are eventually cut – a very real near-term prospect given the lower inflation figure released by the ABS this week – but that flurry will undoubtedly settle in time.

In other words, people who adopt a long-term outlook, counted in 10-year-plus periods, and who embrace a strategic approach to asset selection tend to do well in Australian real estate.

This is something that can be applied to this month’s residential theme of renovation. There’s little doubt that high construction costs are still a major factor, driven initially by the lack of available materials and now mostly a function of reduced levels of skilled labour. These high costs have had a material effect on the renovator market. Across all our submitters we see comments discussing a wider relative disparity in value between homes needing renovation work, and those that don’t. Yet I’ve also noted that most of our submitters retain a positive long-term outlook. The cycle will move on. As construction becomes more feasible, the soft demand for homes requiring work will turn around. At that time, anyone who buys wisely now could find themselves holding a savvy investment. 

Again, the logic should extend to the commercial space, and this month’s topic is looking at entry-level office opportunities. The office investment market has been a real struggle for stakeholders. The slow return to work by employees has seen increased rental incentives and a substantive flight to quality. Yet, there will be opportunities across Australia to buy into affordable office assets markets right now and profit over the long term. It could take some capital expenditure, or a repurposing of the space, or a savvy reimagining of the potential tenant type. Regardless, certain buyers will do well if they apply the right long-term strategy to their purchase.

Finally, for rural readers this month’s impressive articles on Australia’s cropping markets are without peer. Our specialists from across the country have presented a deep dive on this foundational industry sector.

Please enjoy our August edition of Month in Review.