FY20 Wrap-Up and FY21 Predictions on the Property Market

It’s no secret that new home sales fell precipitously in FY20, and all markets — including the Sydney property market — are being impacted by Covid-19. But that’s not all that influenced Sydney’s real estate, housing, and financial markets. Indeed, FY20 trends were a mixed bag of low cash rates, refinance bonuses, and property purchase plunges. But the question remains whether FY21 will continue these trends — or flout them.

A lot has happened over the past financial year — of course, the most notable of which has been the impact of COVID-19 in Australia. 

Let’s take a look at some of the FY20 trends in property and mortgages .  

• RBA slashed the cash rate to 0.25%: We have the lowest ever cash rate in history. This has been intended to provide a helping hand to stimulate the economy, by making property purchase more affordable. There were four rate cuts throughout FY20, leading many analysts to wonder how low the rates could potentially go. 
• Refinancing activity spiked: COVID-19 caused a lot of job uncertainty and people needed to seek out ways to save money. Australians learned how they could potentially save thousands of dollars a year by refinancing their home loans, and take advantage of historically low interest rates. Through refinancing, homeowners were able to save quite a lot of money, putting more room into their budget during difficult economic times.
• Auction and Lending Changes: COVID is causing some financial damage. But it wasn’t as much as one might think. The Sydney market proved to be resilient, and though things slowed, they are likely to rebound quickly. Of course, COVID-19 isn’t entirely over, and the situation may change in Sydney like we are now seeing in Melbourne. There were also a number of auction & lending changes during COVID-19 – the good being that a potential fall in housing prices will see the pendulum swing back to borrowers, but the bad being that financial uncertainty has seen most banks tighten their lending policies. 
• Work From Home Revolution: Employees started working from home more which has sparked a regional property boom. The WFH revolution is about more than just “working from home”; it’s about a change in the way work takes place. Many are looking at their homes not just as their homes, but as their offices, and a lot of companies are looking to downsize their physical presence. A number of employees are also opting to live in outer regions and the country with more flexible work arrangements now being offered. 
• Fluctuating House Prices: House prices continued to fluctuate in Sydney by 0.5%. It makes sense with so many radical changes occurring in the country and on a global scale, but home prices, particularly in residential areas, are falling. But as the economy regains its strength, house prices will most likely start to increase again. Home buyers and sellers alike need advice from professionals to ensure that they capture the most value from their investments.

Overall, the government has been hard at work trying to make it easier for home buyers to afford homes. At the same time, the market has been a little unpredictable — while Sydney’s market has proven itself to be resilient, there are still many external forces that are having an impact.