The Australian property market is incredibly nuanced. Markets like Brisbane, Adelaide, and Perth are soaring by double digits while the markets of Sydney and Melbourne have started to cool considerably. But even if prices in the largest housing markets are mellowing, it does not take away the core and indisputable argument: Housing may never have been affordable but now, the crisis is worse than ever.
The Australian property market is incredibly nuanced. Markets like Brisbane, Adelaide, and Perth are soaring by double digits while the markets of Sydney and Melbourne have started to cool considerably. But even if prices in the largest housing markets are mellowing, it does not take away the core and indisputable argument: Housing may never have been affordable but now, the crisis is worse than ever.
Andrew Schwartz, Co-Founder, CIO, and Managing Director at alternative real estate investment manager Qualitas, doesn't see this structural situation changing any time soon. When he is asked to reflect on the last 12 months in the property market, he effectively described 2024 as one of the less memorable periods of recent years.
"I think it'll go down as one of the less exciting years that we're going to think about when we reflect on the years that have gone by," Schwartz reflects.
"As we're approaching the end of 2024, it's quite clear that markets are starting to slow down and a lot of that momentum is coming out of the market."
But he does see next year becoming far more "interesting", "fascinating", and even a "thriller" for investors in this asset class.
"I think it's getting very exciting in 2025. There are many reasons why I feel that but in particular, residential property is affected by supply and demand and interest rates. When you look at each of those individual factors, you do see a market where Australia is caught short on the supply side at the moment and it's been very hard to get supply into the market. We have quite significant demand coming in and we have had a sustained period of relatively high interest rates," Schwartz says.
Schwartz's comments here on this asset class really matter. Qualitas, the company he co-founded, has nearly $9 billion in funds under management today, mainly from overseas and domestic institutional investors who want to access the lucky country's most famous asset. An asset that, Schwartz argues, is a better store of value than stocks, crypto, and even gold.
On this week's edition of The Rules of Investing, Schwartz is sitting down with guest presenter Hans Lee to discuss his views on these key tailwinds, his take on the macro environment, and where he sees growth opportunities in the Australian property market today.
Timestamps
0:00 - Intro
1:39 - How would you characterise the last 12 months for the Australian property market?
2:42 - What is your overall view of house prices in 2025?
3:51 - Why does Qualitas have such a large weighting in its portfolios toward residential property?
6:57 - How many new homes does Australia need to build in order to increase vacancy rates?
8:13 - The $250 billion financing opportunity in Australian residential real estate
9:36 - Do you see the affordability crisis improving across Australia?
12:43 - Are governments the entity that should be taking up most of the burden to make the affordability crisis easier?
15:01 - Is there a distinction between established and off-the-plan housing worth talking about?
18:24 - What economic signals do you pay attention to as an investor?
22:39 - Is the answer to increasing housing supply "drop rates to zero"?
25:41 - Has the worst for delinquencies and the tradie shortage passed?
29:54 - Why residential property is a fantastic store of value
33:24 - Which regions of Australian property could outperform in 2025?
36:05 - Our three regular questions - with a property twist
