Why Labor’s Housing Strategy is a Road to Nowhere for Australians

Australians have a national sport that isn't played on the field: it's property talk.

Whether it's dissecting the latest market movements or bemoaning the uphill battle to break into the housing market, it's a hot topic at every backyard BBQ.

But as we look ahead to 2024, the fact is that the housing shortage will remain, meaning rents and prices will keep rising and First Home Buyers will keep having a tough time.

Fact is in 2023, we saw first home buyers retreat to the lowest levels since the 2008 Global Financial Crisis.

Here are two glaring indicators that point to what’s ahead in 2024:

1. The Migration Mismatch

The record level of migration has been completely decoupled from the number of new homes built and the delivery of new infrastructure.

In 2023, Australia rolled out the welcome mat to approximately 520,000 migrants, yet the construction sector only managed to add 175,000 new homes to the market.

This glaring misalignment doesn't even factor in the housing needs spurred by natural population growth and the already existing undersupply of properties.

In my mind, the government's approach seems to favour a 'sugar hit', a quick win of economic growth sparked by migration over the long-term goal of housing affordability.

Sure, the government has said is going to reduce migration numbers, but

this ‘reduction’ is actually an increase from the pre-Covid levels of migration we experienced.

And yes, the government said they’re going to build 1.2 million homes over the next five years, but they’re really not going to build any homes at all.

They’re going to encourage developers to do so and no one in the industry seems to think these figures are actually achievable.

2. The Approval Bottleneck

The second critical issue is the sluggish pace of new home approvals.

Last year's dramatic downturn in approvals is a time bomb set to detonate as fewer homes will enter the market when they’re needed most.

What’s ahead for 2024?

There is no doubt the shortage of dwellings both for sale and for rent, at a time of skyrocketing population growth is going to continue in Sydney into 2024.

And as buyers and sellers realise that we have reached a peak of interest rates and that inflation is coming under control and consumer confidence returns, buyer and seller activity will pick up.

So I currently see a window of opportunity to get into the property market before the crowd does.

In fact, the cost of waiting to invest in 2024 became even more real.

If you look back at previous cycles, when the market turned property prices surged rapidly – look at what happened in the post-Covid property rebound in 2020 or in 2019 when the market suddenly turned after the Federal election.

Of course, those who acted then and purchased quality investment-grade properties are possibly thousands of dollars ahead and have set themselves up for financial security.

The media are catching onto what’s happening and reporting more good news prop stories.

This means the window of opportunity will close sooner rather than later as more homebuyers and investors into the market.

Moving forward over the next decade, townhouses, villa units, and family-friendly apartments will be great investments, especially considering their current affordable entry price compared to houses.

And with soaring construction costs it is likely that all new apartment projects will cost 25%-30% more than currently completed projects and this causes the value of established apartments to rise as well.

My advice to investors is to avoid:

• Packed high-rise apartment towers.
• Locations right in the thick of the CBD – they’re over-supplied and have low growth drivers.
• Highly-featured complexes with lots of shared spaces that are expensive to maintain, like lifts, pools, and gyms.

Instead, I suggest you look for larger family-friendly apartments and units in middle-ring suburbs, which are close to good schools, parks, and cafes.

Throw in some good public transport links, and you’ve got the ideal investment for the Australian family of the future.

About Michael Yardney Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.