As we enter into the last month of 2020, it’s time to look at how the Australian property market fared over the tumultuous year.
For many Australians, it has been a year of uncertainty and unchartered territory as we battled the economic downturn as a result of the COVID-19 pandemic. Though conditions were slated to be grim at the start of the year, we are now looking at an extremely positive finish to the year, with housing price recovery well underway and the economy bouncing back faster than expected.
We have much reason to rejoice in festivities this Christmas, with the virus in remission, social restrictions lifting nationwide and state borders opening up again. Following on from a dip in home values in the months following the initial onset of the pandemic, CoreLogic has now reported the national index is up +0.8% over the month of November, with consumer sentiment continuing to rocket upwards.
In this market update, we will cover:
- The current state of the housing market in November
- What the property landscape will look like in 2021
- Should you sell or buy?
What did the Australian property market currently look like in November 2020?
As life appears to be returning to normal, CoreLogic’s Hedonic Home Value Index for November shows national dwelling values have continued to recover, up 0.8 per cent.
Across the combined capital cities this week, 2,155 homes were scheduled for auction, up from 1,803 over the previous week. Of the 1,763 results collected so far, 73.9 per cent were reported to be successful, slightly higher than last week’s preliminary auction clearance rate of 73.6 per cent.
Inventory levels remain low across Australia, pointing to a sellers market in the current property climate. Although the spring period saw a 42 per cent rise in the number of new listings added to the market nationally, total homes listed for sale on the market remain down -14.6 per cent this week compared to this time last year. This reflects a strong rate of absorption, as prospective buyers continue to outnumber newly advertised supply additions.
According to CoreLogic’s Head of Research, Tim Lawless, “Low advertised stock levels, together with a rising number of active buyers, is creating a renewed sense of urgency in the market. Buyer demand is mostly being fueled by a surge in owner occupiers rather than investors, looking to take advantage of historically low interest rates, generous government incentives and an increased state of normality.”
What will the property market look like in 2021?
Based on our current growth trajectory, Australian house values look set to surpass their pre-COVID highs early next year.
The national home value index is still seven tenths of a per cent below the level recorded in 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 next year.” said Tim Lawless.
Housing demand continues to rise due to the broad range of stimulus measures and changes in consumer sentiment. Record low interest rates continue to prop up interested buyers, while government incentives including changes to stamp duty and additional building grants will also continue to support demand.
As buyers number rise, available inventory remains low, creating urgency amongst buyers which in turn is adding to the upwards pressure on home values.
COVID-19 has also changed the way many people work and live. Traditionally, Australians have found themselves living in areas that didn’t necessarily have elements of their ideal lifestyle, but did provide convenience for work. The pandemic opened up other options, and many may never return to a full-time centralised work week with a daily commute, as employers realise that technology can aid in making an alternative solution possible.
This opens up areas beyond the city limits for Australians to look for the perfect home to suit their ideal lifestyle, whilst maintaining a hybrid approach to work, accelerating movement towards regional cities and outer suburbs.
Australians are feeling increasingly more positive about the real estate market, with consumer sentiment bouncing back rapidly and set to grow even stronger in 2021 alongside the rapid recovery from the economic downturn hastened by the pandemic. For buyers, plenty of government stimulus (changes to stamp duty in NSW and VIC, first home buyer concessions) in addition to proposed changes to lending obligations are slated to be rolled out in March 2021, enabling access to increased incredit even easier for Australians, seeing more buyers enter the market.
So will 2021 be a good time for you to buy or sell? Read on.
Will 2021 be a good time to buy a home?
Australians are feeling more and more confident about the property market, with consumer sentiment at its highest levels since the end of 2013. For many buyers, plenty of incentives such as first home buyer concessions and the lowest interest rates in history slated to hold for then next three years, in addition to changes to lending obligations expected to roll out in March 2021 will make credit much easier, meaning plenty of incentives to buy your dream home.
Proposed changes to stamp duty in NSW (the option of paying the usual upfront lump sum or a significantly lower annual land tax), could incentivise buyers to enter the market. With the expected property price crash no longer on the horizon with prices on the rebound, if you are looking to buy, now could be the right time. As always, it’s important to assess the market you wish to enter, and do your proper research and ensure that you are financially positioned before making any big real estate plays.
Should I sell my house in 2021 or wait a bit longer?
The Australian property market has marched against all odds and fared quite well - housing values have remained resilient, and in many regions, are now on a rebound trajectory to growth. Home values have been insulted by historically low levels of stock on the market, government stimulus, record low interest rates and mortgage repayment holidays - meaning that if you’re positioned well financially, now could be the perfect time to sell.
First-home buyers are out in droves, with a fight to quality driving high demand for what is currently available on the market - ensuring that sellers have a great chance of getting a good price for their home.
It is vital to understand how your local market is performing before making any moves to enter the market. A broad picture of the national real estate market is not always indicative of the situation in your local area, so it is important to do your research by comparing similar sales across properties in your area of similar type or price range, and speak to your local real Upside estate agent to get a better understanding beyond the media headlines.