Property News, Insights & Education

    2024's growth areas: Learning from John Lindeman

    • John Lindeman is one of Australia's one of the leading investment experts and is the author of the highly regarded “Unlocking the Property Market: The 7 Keys to Property Investment Success”
    • He argues commentators and analysts overestimate the importance of interest rates, while the real dynamics of property investment are supply and demand
    • Lindeman has identified several “pressure cooker” areas and markets, which he says are set to boom

    One of Australia’s shrewdest property watchers, John Lindeman, has unveiled his predictions for 2024.

     

    Lindeman has been a successful investor in residential real estate for more than 40 years.

     

    His 2015 book, “Unlocking the Property Market: The 7 Keys to Property Investment Success”, has become a must-read for people serious about generating wealth through property.

     

    The year that was

     

    Looking back on 2023, John Lindeman notes how many analysts and commentators predicted at the start of the year that property markets would fall substantially, but were proved wrong.

     

    In fact, CoreLogic figures show in late November the median Australian residential property price hit a new record high.

     

    “The reason they got their forecasts wrong was because they were looking at the wrong dynamics”, Lindeman says.

     

    “They were focusing on interest rates.” 

     

    Lindeman says the initial sharp hiking of rates by the Reserve Bank of Australia from May 2022 did temporarily throw the property market into what he says was “a state of shock”, but in the end, “there was no long-term effect at all.” 

     

    The reason, he says, is quite simple. 

     

    “You see, one third of all our properties are owned without any mortgage debt whatsoever.”

     

    “They're bought and sold without any need for finance.”

     

    “Another third are owned by investors who can both claim the cost of interest off their other income and can also periodically raise the asking rents”, he says.

     

    “That leaves one third of properties, many of which the owners who have mortgages were taken out maybe over ten years ago, when rates were actually higher than they are now.”

     

    “So a very small proportion of homebuyers were affected by the interest rate rises and they were badly affected, but it was only a small proportion.”

     

    “The real dynamics are about supply and demand.”

     

    Prop of Households_Jan_04_24 (1)

     

    “Pressure cookers”

     

    John Lindeman likes to talk about areas he calls “property market pressure cookers”.

     

    He points to Australia’s population growth rate hitting record levels, while the supply of new dwellings coming onto the market is falling further behind the demand.

    “Not only are there insufficient new building approvals, but new dwellings are being built in areas which meet developers’ bottom lines, which is not necessarily where buyer and renter demand is the highest,”

    John Lindeman, Australia’s leading property market analyst

    “Not only are there insufficient new building approvals, but new dwellings are being built in areas which meet developers’ bottom lines, which is not necessarily where buyer and renter demand is the highest,” he says.

     

    “That’s why asking rents are shooting up in suburbs where rent demand is surging, while prices are set to boom in locations where buyers are competing.”

     

    “These locations are like property market pressure cookers…promising to deliver massive windfalls to savvy investors.”

     

    As an example, John Lindeman says he predicted two years ago that Perth and Adelaide's lower-priced suburbs were about to boom.

     

    “The reason I made those predictions was because they were affordably low priced properties at around $400,000.” 

     

    “There hadn't been any price growth for a long period of time”, he says.

     

    “There'd been very little new housing development and yet the demand was increasing dramatically.” 

     

    “And so, of course, prices started to rise, rents started to rise, and at the moment they're the best performing capital city markets in Australia.”

     

    Real estate data analytics group PropTrack recently named its top-performing suburbs in Australia for price growth.

     

    Nine of the top ten were in Perth, with the other on Adelaide’s northern outskirts.

     

    With an average year-on-year increase in value of 31.5%, their average median price has shot up from $352,624 to $463,700. 

     

    Top Suburbs_Jan_04_24

     

    So where are the next “pressure cooker” areas?

     

    John Lindeman says all the bargains in the areas he identified two years ago are now gone, and all investors looking to buy there would be “making those early buyers more wealthy than what they otherwise would be”.

     

    “Look to the next areas that have got growth potential, which meet all those criteria that Perth and Adelaide's low price suburbs did two years ago”, he says.

     

    His checklist is as follows:

     

      1. Very little to no price growth over a long period of time 

     

      2. Relatively low prices - around $400,000 to $600,000

     

      3. Little new housing development 

     

      4. An increase in buyer demand and rent demand

     

    Lindeman says areas with these attributes can be found right around Australia.

     

    “For example, unit markets in Perth haven't really moved at all.” 

     

    He claims “they're set to boom.” 

     

    Lindeman says unit markets in growth corridors in Brisbane, Sydney and Melbourne are set to boom as well. 

     

    It’s a different story when looking at houses, though.

     

    “We need to look at the lower priced areas of our capital cities and the best opportunities to be found are in places like Logan and Ipswich out of Brisbane, where prices are low, and there's been little development”, he says.

     

    “They meet all the criteria for growth - and to go further north, those big northern cities of Cairns, McKay, Townsville, Rockhampton, Gladstone…all have huge growth potential for the same reasons.” 

     

    “Very affordable buy prices, little development, increase in demand, huge rental shortages.”

     

    “So these are the areas I'd be looking at for your next property investment.” 

     

    Lindeman says there are many variables in the property market, but he’s clear about one thing.

     

    “The only certainty is that the next property market boom is on its way,” he says, “with property prices increasing dramatically over the next few years.”