Property tipped to get its MOJO back: ME’s property trend predictions for 2021
As we close the curtain on a turbulent year and welcome the New Year, ME’s Head of Home Loans, Andrew Bartolo shares his top property trends to look out for in 2021.
Prices will likely rise
“Property prices are expected to rise across multiple markets in 2021,” says Bartolo.
“A resilient housing market that has weathered the economic pressures of COVID-19 together with lower interest rates will give homebuyers and investors’ confidence.
“While there are still many challenges including unemployment, job insecurity and lower immigration, we’re seeing some positive signs: improved consumer confidence, stronger auction clearance rates, more transactions, and falling loan deferrals – generally considered proof of a healthier market.”
“Homeowners are also reporting a similar sentiment. According to a ME survey of 1,500 households conducted this month, 46% of owner occupiers expect the value of their dwelling to increase during 2021 rather than decline (5%) – a substantial change from six-month prior when only 22% expected dwelling prices to rise and 25% expected them to decline.
A clear ‘two-speed’ market will continue
“Sentiment among those intending to buy or sell in the next 12 months will likely be ‘two-speed’. Many will be looking to buy or sell as soon as possible, while others may delay their move until they feel more confident about their own personal finances and/or the economy.”
Demand: Properties will sell
“In terms of demand, buyer activity is expected to be up year on year due to so much of 2020 being affected by lockdowns and buyers and sellers ‘waiting to see’. Pent up demand will wash through early 2021.
“More investors will re-emerge in 2021 in search of income and capital growth. Record low interest rates will drive momentum across the market.
“Strong first home buyer activity will also continue, after a brief dip in property prices. Historically low interest rates, stamp duty exemptions, government grants and the absence of foreign investors will continue to propel first home buyers into action.”
Supply: A rush of fresh real estate listings will hit the market
“More and more listings will return to the market by patient sellers who have waited all year to put their homes on the market, which will be quickly snapped by eager buyers.
“Early 2021 is expected to be a bumper property season that will rival the traditional spring frenzy experienced in previous years as buyers respond to a late surge in auction listings.
Desire for ‘urban village’ living will accelerate
“Topping the property trends in 2021 is the desire for ‘urban village’ living, related to the significant increase of professionals working from home. With the daily commute no longer a deciding factor in the homebuying process, regional areas within a commutable distance to CBDs are being added to homebuyers’ wish lists.
“Many are succumbing to the appeal of a slower pace of living, a closeness with nature, connection with neighbours and a feeling of belonging. Yet all the benefits and convenience of being close to the city.
“More first home buyers are likely to choose this path. A ME survey in June 2020 that found two-thirds (60%) of first home buyers were more likely to consider buying in a regional area due to COVID-19, to save money and improve their lifestyle. To help first home buyers narrow their property search, ME recently released the top 20 regional towns in Australia. The national winner is Nairne, South Australia, a 40-minute commute to Adelaide.
“The demand in regional areas has started to translate in higher prices with the November CoreLogic Home Value Index showing 6.8%growth in regional verses capital city growth of 2.9 per cent in year-to-date”.
More competitive home loans
“Competition in the home loan market will continue to benefit consumers looking for a good deal. Many lenders including ME have sharpened home loan rates to attract and retain customers.”