Welcome to this week’s Property Edge Weekly Newsletter, where we bring you the insights and analysis to stay ahead in Australia’s ever-evolving property market. From the ripple effects of foreign investment shifts to the long-term outlook on interest rates, we’re diving into what these trends mean for property entrepreneurs like you. Whether you’re adding value through renovations or planning your next strategic move, this edition is packed with actionable insights to keep you in the game.

Quick heads-up: Before we get into the details, we wanted to share something important.

SPECIAL EVENT: Unlock No-Money-Down Property Deals!

Ready to learn how to master property deals without spending a cent of your own money? We’re hosting an exclusive series of LIVE webinars this Saturday and early next week, titled:

“Find and Flip Property for Profit—Powered by Property AI”

This isn’t just theory—it’s a practical blueprint for success in today’s market. Join us to learn how others are already leveraging these techniques and how you can, too!

Click here to reserve your spot

P.S. Spaces are limited, so don’t miss out—secure your spot now and start flipping for profit with confidence.

Back to the newsletter….

Business Closures Surge to Pandemic Levels Amid Economic Strain

Australia is witnessing a significant increase in business closures, with insolvency rates returning to levels observed during the pandemic. Data from the Australian Securities and Investments Commission (ASIC) reveals that over 11,000 companies became insolvent in the 2023–24 financial year, marking a 39% rise from the previous year and the highest rate since 2012–13.

The hospitality sector has been particularly affected. In South Australia, hospitality business failures have increased by more than 50% compared to the previous financial year, with 86 companies entering administration or liquidation by May. Nationally, the construction, accommodation, food services, retail trade, and manufacturing sectors have also experienced significant insolvency rates.

Several factors contribute to this trend. Rising operational costs, including ingredients, rent, electricity, and labour, have led to numerous closures. For instance, the construction industry has faced challenges, with companies like Liberty Building Contractors entering liquidation amid financial pressures.

The increase in business closures has broader economic implications, including higher unemployment rates and potential impacts on the property market. As businesses close and jobs are lost, more individuals may struggle to meet mortgage obligations, potentially leading to a rise in distressed property sales.

In response to the economic slowdown, there have been calls for the RBA to lower interest rates to stimulate growth. While reduced rates can make borrowing more attractive, they may also signal underlying economic weaknesses. Analysts suggest that the pain felt by small and medium-sized enterprises will cascade to larger businesses and lenders, who are preparing for potential loan defaults and decreased profits.

In summary, the current economic climate, marked by increased business closures and job losses, is likely to lead to a rise in distressed property listings.

Musical Chairs: Limited Supply Equals More Opportunity for Property Entrepreneurs

The latest Foreign Investment Review Board (FIRB) data reveals a significant drop in offshore investment in Australia’s housing market. Foreign funding has fallen by $1.3 billion, driven largely by an $800 million reduction in Chinese investor activity. While at first glance this might sound like a win—less competition in the market—it’s actually a double-edged sword.

Foreign buyers aren’t your competition. FIRB restrictions mean they can only purchase new builds or off-the-plan properties, and their investments are critical for driving housing construction. When they step back, fewer homes get built, tightening supply. For property entrepreneurs, this isn’t a crisis—it’s a unique opportunity.

Why Limited Supply Means Opportunity

Markets with limited stock and high demand are where property entrepreneurs thrive. When foreign investment dwindles, the pipeline of new housing slows, and demand shifts toward existing properties. This creates prime conditions for those who know how to navigate the market. Limited supply drives up property values, creating opportunities to profit, whether through flipping, developing, or holding assets for future gains.

As competition intensifies for existing homes, savvy property entrepreneurs can position themselves to capitalise on rising prices and booming demand. Think of it like the hospitality industry: you wouldn’t buy a café during a downturn when no one is spending, but you’d jump at the chance in a thriving market with limited competition. The same logic applies here—strong demand and tight supply are signals of opportunity.

The “Musical Chairs” Advantage

Picture the housing market as a game of musical chairs. When foreign investors leave, a chair disappears—but for property entrepreneurs, this means a chance to own the remaining chairs. The imbalance creates an environment ripe for those who understand the dynamics and can act strategically.

Opportunities exist to:

• Renovate and resell: With fewer new homes being built, well-presented existing homes will fetch premium prices.
• Add value: Subdivisions, extensions, or high-demand upgrades can yield significant returns.
• Hold assets: Limited supply and ongoing demand point to long-term capital growth for existing properties.

A Booming Market for Property Lovers

At Property Lovers, we see markets like this as golden opportunities. A tighter market is a booming market for entrepreneurs ready to meet demand. When the playing field shifts, the savvy player profits. Less new stock means more demand for what’s already there—and that’s where entrepreneurs can shine.

This is the time to:

• Leverage AI to research the market, identify high-potential properties.
• Strategically position yourself in areas with increasing demand.
• Use the market’s momentum to amplify returns on existing or value-add stock.

The Bottom Line

This isn’t a market for sitting on the sidelines. With fewer new builds coming online, the value of existing properties will rise, and demand is unlikely to slow anytime soon. For property entrepreneurs, it’s a moment to act—not out of fear, but out of foresight.

As foreign investment falls and construction slows, the demand for existing properties only grows. It’s not about seeing scarcity; it’s about seeing opportunity. In a game of musical chairs, the key is to stay in the game—and when the music stops, have the best seat in the house.

Australia’s Economic Tranectory and Housing Implications

And if the decline in new builds creates opportunities for property entrepreneurs, particularly in the renovation space; let’s turn to the broader economic picture which provides more context on why this is happening—and what it means for the property market.

Economist Gerard Minack warned this week that Australia is facing a structural growth problem. Since the mining boom peaked in 2012, low investment and rapid population growth have crushed productivity, leading to weak income growth. Poor productivity weighs on GDP growth, while rising labour costs (around 6%) keep inflation stubbornly high. This, in turn, weakens the case for sustained high interest rates, even as they remain a burden for households and businesses in the short term.

The debt-fuelled recovery from the pandemic has created an inflationary environment that forces businesses and governments to focus on immediate cost-of-living pressures. Telstra CFO Michael Ackland described this as the “short-term, long-term problem.” Investments in infrastructure, automation, and skills are needed to unlock productivity and prosperity, but they require certainty—something the current regulatory and economic environment struggles to provide.

Mirvac CFO Courtenay Smith noted that construction costs have soared by 40%, making it harder for developers to move forward with new projects. Slow planning approvals only exacerbate the problem. The housing crisis continues to deepen as demand outpaces supply, with developers hesitant to build and governments slow to act.

QBE CFO Inder Singh reflected on Australia’s anaemic growth compared to more proactive investment climates in the US and UK. Capital flows to where it’s easiest to do business, and Australia risks being left behind if it cannot create a more conducive environment for investment.

What This Means for Property Entrepreneurs

The economic backdrop reinforces the opportunities available for early movers. Fewer new builds mean existing housing stock becomes increasingly valuable. For property entrepreneurs, this creates openings in renovations, value-add strategies, and high-demand locations. As new supply stagnates, the demand for well-maintained or improved properties will only grow.

While the broader economic challenges are clear, these conditions highlight where the opportunities lie for those ready to act. As we continue to navigate this tightrope economy, property entrepreneurs can position themselves to profit from the shifts in supply and demand.

When to Expect Interest Rate Cuts – And Why It’s All Upside for Property Entrepreneurs

Economists are now tipping that The Reserve Bank of Australia (RBA) is expected to maintain its current cash rate of 4.35% until mid-2025, with the first cuts likely in May 2025. Westpac and NAB predict a gradual easing of rates, with NAB projecting quarterly cuts from May 2025 that could bring the rate down to 3.10% by mid-2026. This conservative timeline reflects the RBA’s cautious approach to balancing inflation and economic growth.

For property entrepreneurs, this forecast is full of opportunity. With rates stabilised at current levels and a clear downward trajectory ahead, there’s an upside in planning investments now. Factoring in today’s rates as a conservative buffer provides a safeguard, while the eventual rate cuts should ease borrowing costs, creating opportunities to refinance, expand portfolios, or take on new projects.

The market is primed for those who think ahead. By incorporating the current rate environment into your strategy, you position yourself to benefit from a more favourable lending landscape down the line. It’s all about planning for the upside.

As always, the property market is full of challenges—but also immense opportunities for those with the foresight to act. This week’s stories highlight how understanding market dynamics can turn uncertainty into advantage. Take these insights, apply them to your strategy, and stay ahead of the curve. We’ll be back next week with more market updates and opportunities to help you thrive in property. Until then, keep building and growing!

Warm Regards,

Property Lovers Team

Important Reminder:

SPECIAL EVENT: Unlock No-Money-Down Property Deals!

Ready to learn how to master property deals without spending a cent of your own money? We’re hosting an exclusive series of LIVE webinars this Saturday and early next week, titled:

“Find and Flip Property for Profit—Powered by Property AI”

This isn’t just theory—it’s a practical blueprint for success in today’s market. Join us to learn how others are already leveraging these techniques and how you can, too!

Click here to reserve your spot

P.S. Spaces are limited, so don’t miss out—secure your spot now and start flipping for profit with confidence.