At the beginning of the year, predicting the property market is often a hot topic of conversation. With last year’s unpredictability, 2021 is set to be an interesting year, hopeful of a rebound from the COVID-19 pandemic. With low interest rates, the speculation has been largely positive. Driven by shifting needs and cheaper borrowing options, we’ll look at what 2021 is likely to bring and how Shore Financial can help fulfil your property goals.
The pandemic has triggered a lot of expats to reexamine their priorities, leading more people to consider moving back to Australia. A key incentive is wanting to settle down and raise their families in a place that they know, and they’re willing to pay top-dollar for it. As Australia is one of the few countries that has been able to decrease the number of COVID-19 cases, it makes the lifestyle and property market more desirable than other areas of the world.
Considering the digitalisation options today, expats also have more platforms than ever before to take out a mortgage remotely. It makes it easier to coordinate the entire sale from afar until they’re ready to move in.
The RBA has cut interest rates down to a historic low of just 0.1% in an effort to boost the economy. The Reserve Bank’s Philip Lowe has also stated that they don’t expect to raise rates again for at least three years. This kind of incentive has piqued the interest of investors across the country.
These low-interest rates have given borrowers more confidence to jump in, which has resulted in the high-clearance rates we’re seeing. This has led to predictions of a higher rate of transactions in the near future.
The fear of COVID has been decreasing in Australia, which is leading more people to consider investing in property. With more Australians willing to make commitments, we should see more sellers and buyers in 2021. Many established investors are expected to continue looking for great investments to expand their portfolios further.
As more inventory comes on the market, established investors will likely offload poor performers for better quality real estate. Between this and the low-interest rates, financial experts believe that buyers will be ready to stretch their finances for their dream home.
If you need more proof, just check out the numbers from October 2020. New loan commitments rose by 0.7% for housing and by 4.3% for personal fixed-term loans. These seasonally adjusted numbers also show that commitments fell by 2.1% for business construction, which is the kind of volatility we’d expect for this sector.
That’s $22.7 billion in total value for housing, a record high. There was also a rise in new owner-occupier loans in the same month, reaching $17.4 billion, more than 30% higher when compared to October of 2019.
Finally, commitments for new dwellings rose to nearly 11% and was said to be the largest factor for the rise in owner-occupier loan commitments.
Based on the numbers from APRA, November home loan deferrals are down to below 3%. This is down from 11% in June and a sharp decline from September.
This reduction will likely limit the surge in distressed property coming on the market. If this does occur, it’s predicted to be in the high-rises of the inner city, given the vacancy rates and rent reduction that we’ve seen there.
The pandemic has redefined what a home is for Australians. Before, it might have been considered nice to have a playroom and a home office. Today, it’s considered more of a necessity than a luxury.
The same can be said for outdoor spaces. Inner-city spaces are prioritising the creation of green spaces, such as parks and community gardens, to give those without a backyard a viable outdoor outlet.
In some suburbs, house prices have jumped by 20%, largely due to a lack of property going on the market. However, this is not the case for apartments. There are fewer buyers out there right now, so whether you’re buying your first home, downsizing, or looking for an investment property, now might be a great time to find quality stock in apartments.
The property trends for 2021 show that the Sydney property market is unlikely to crash anytime soon. The 2020 high-note numbers, combined with the motivations of buyers, have shown us that residential property should be a strong market. First home buyers and those looking to buy new property this year have every reason to be hopeful for the future.
We saw the value of property fall 2.9% between April and September, but they’ve rebounded since then. If you’re going to take advantage of this resilient housing market, it helps to talk to someone who can help.
If you’re looking for a partner that can help you sort out your mortgage, Shore Financial is here to help. As the property experts, we’re here to tell you that owning real estate doesn’t have to be an ordeal. If you’re ready to take your dream to the next level, it’s time to learn more about what we can do for you.