With demand for property through the roof, it’s certainly a good time to think about selling for those considering a change. There are five trends that experts have predicted when it comes to the property market for 2021.
- Demand to purchase will remain at elevated levels
Despite rising unemployment and business closures, residential properties for sale skyrocketed in 2020. Household saving has reached levels not seen since the mid-1970s, with many Australians unable to spend money the way they normally would. With most stimulus measures to continue into early 2021 and interest rates to remain low for a number of years, buyer demand will likely stay at near record-high levels in 2021, driving strong demand for property purchases.
- Some rental markets will remain challenged
Inner-city apartment markets are likely to continue to face reduced demand while Australia’s international borders remain closed. Renters are likely to be looking for better or cheaper accommodation when their leases expire and there will be significant competition amongst landlords to secure tenants.
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First-home buyer activity to fade and investors to return
Demand from first-home buyers in 2020 has been buoyed by fewer investors, historic low borrowing costs and government incentives. As a result, the value of lending to first-home buyers reached an historic high in October 2020 and was 48.6% higher year-on-year. At the same time, the value of lending to investors has been lower than lending to first-home buyers over recent months, however this has started to rise recently. The types of properties investors purchase are likely to be far different to the typical stock they have targeted in the past, such as one-bedroom and two-bedroom, inner-city apartments.
- Low overseas migration will have repercussions for new housing
While birth rates have been falling, Australia has continued to see a comparatively high rate of overseas migration. If someone wants to purchase a property before they become a citizen, they will typically have to purchase a new home. Given this, a lot of demand for new houses and units is driven by non-citizen purchasers. With the international borders shut throughout this year and seemingly well into 2021, this will create challenges for the new housing sector.
- Property prices to continue to rise
Australia’s housing market has been surprisingly resilient through the recession in 2020. Property prices have been rising over recent months, fuelled by strong demand and low borrowing costs. It seems unlikely that these conditions will change in 2021, unless there is an unexpected surge in the volume of stock listed for sale.
While stock for sale is likely to rise, it still seems likely that it will not surge to the extent that it removes the upwards pressure on prices. Overall, 2021 is shaping up to be a strong year for the housing market but certain areas will fare better than others.
