HOW THE 2020 PROPERTY MARKET PROVED TO BE SAFE AS HOUSES
At the peak of the pandemic, leading economists, including those from all the major banks, predicted nothing but doom and gloom for the real estate market. While we were told we could expect to see 10-20% wiped off the value of our homes, it turned out to be the property price crash that never was. Even amidst the height of the COVID restrictions, property prices declined only nominally. In fact, national property values fell just 1.7% over the 12 months to November. So how did we manage to avoid the disaster we were all bracing ourselves for?
Government stimulus packages such as JobKeeper and JobSeeker in conjunction with home loan deferrals have been effective in staving off the anticipated property price slump, throwing a much-needed lifeline to those in need.
The RBA recently dropped the cash rate to a record low, which was generally passed on by the banks, making money cheaper than ever before. Next year we’re set to see the introduction of more relaxed home lending criteria, which will enhance our access to funds. On top of this, the opening of state borders has helped fuel demand, which will be heightened with the opening of international borders, which has been slated for March 2021.
While figures showed that business profits and wages were still reliant on government support through the September quarter, Australians increased their savings, apprehensive about the economic fallout from the pandemic. Data from the Australian Prudential Regulation Authority revealed that households deposited almost $110 billion into their savings accounts over the past year – the highest deposits to the nation’s banks on record. This gives people a launch pad for spending into next year, with much of these savings likely to be ploughed into the housing market.
Encouragingly, our own Belle Property [your office] data supports these reports of a market recovery. When comparing Spring 2019 with 2020 figures, our average sale price increased by 5% across houses and units. Total listings coming onto the market increased by almost 12% and days on market declined by a significant 33.5%, underscoring the pent up buyer demand.
The great news is that pundits are now tipping house values to increase 5-10% in 2021 if the virus remains under control in Australia. Building on gains made in October, CoreLogic recorded a 0.8% rise in dwelling values in November. If this growth trend continues, Tim Lawless, CoreLogic’s head of research, believes that the national home value index will surpass pre-COVID levels by early 2021. He commented that, “The national home value index is still 0.7% below March, but if housing values continue to rise at the current pace we could see a recovery from the COVID downturn as early as January or February.” This positive sentiment highlights the inherent strength in our property market and the enduring appeal of bricks and mortar as a sound investment in any climate.
The Best of the Beaches
We really are a lucky country! There is no better lifestyle in the world than what we have in the beach side suburbs offering an enviable work/life balance. [suburb names] are very much in high demand with buyers making premium offers to homeowners looking to secure a family home and a lifestyle.
With the median price of units in [suburb] at $895,000 and houses at $2.17million, and [suburb] units fetching a median price of $1.2million and houses of $2.87million, living a relatively short commute from the CBD means these suburbs will continue to be a very attractive property investment while offering a relaxed, beachside community full of great village cafes & restaurants and some stunning coastal walks.
Looking forward to 2021
With predictions of increased demand, it wouldn’t be surprising if property values increase significantly throughout 2021. Our local team know the [suburb] neighbourhood better than anyone, so make sure you get in touch with Belle Property Head Office on 02 8116 9444 for a confidential chat about your property outlook for 2021.
*Source: www.realestate.com.au neighbourhood data