Thoughts on the Property Market for 2021

Hi folks,

Firstly, happy new year to everyone and hope you had a refreshing break and Xmas/New Year.

I am keen to understand what everyone thinks about how the market will go this year. From my perspective, from the people I am talking to and general observation, I am seeing a very large number of first home buyers looking for new properties, and there is a significant level of interest in purchasing investment properties - this is based on my personal relationships, and also from discussion and engaging with my different business partners.

With the interest rates so low and the government loan/mortgage restrictions more eased from a few years ago, along with incentives for first home buyers (e.g. excluding stamp duty in certain cases), I think the market will be in positive territory during the year.

Please post your thoughts by replying here, and include some points to illustrate your thinking - I'd be interested to compare this to when we reach towards mid-year then towards end of the year to see how things panned out.

Cheers.

 

As with everything these days, Covid will play a big role in the property market.

I think the biggest effect it will have on the property market is the amount of people wanting to work from home and not wanting to go back to work from offices in the CBD mostly.

Which should push property prices higher in suburbia higher and lower CBD apartments prices.
Add to that, a lot less overseas investors who generally by CBD apartments so again i think CBD apartments will take a big hit.

 

One from left field.

I actually think (hope?) COVID issues will subside in 21 and our collective ability to forget quickly will take place. That will lead to recovery.

I think that we will be on the lookout for the next ''catastrophe' and the climate induced changes will come into focus more, and i think those areas susceptible to flood, storms, storm surge,cyclones, fire and drought will all be strategically avoided by many people.

Property is not a 12 month proposition so i think some of these longer term issues will show up in people's movements and where populations will grow.

Maybe Tasmania will continue to shine? I also think that cities/centres with great climates will grow, but those places that are too hot and dry will wane. Coastal properties will start to fall into the sea.

 

There are no migrants coming so far and it’s unclear when they start coming.
There are no international students coming and it’s unclear when they start coming.
Based on the above and incentives for first home buyers, my prediction is that in the short term /2021 only and possibly 2022/ rental demand would drop. Investors would not realise this fast and would still buy houses, driving prices up together with owner occupiers

 

All good points Ozzi.

The other dimension for the rental market is the HomeBuilder Grant. Currently Australians are building the largest amount of houses in 21 years. Private sector house dwelling approvals Nov 19 to Nov 20 is up 33.6%.

The owners are majority all young renters that will move out of their rentals at the end of the year, into their brand new OO property leaving rentals empty around the country.

 

2021 Forecast:

Regional Australia will outperform the capitals...as it did in 2020.

Detached housing will outperform townhouses/apartments.

Detached housing on larger blocks will outperform detached housing on smaller blocks (all else being equal).

 

Yes, this is not new and this is why my prediction was only for 2021 and possibly 2022. This is unpleasant, though, just because I have several IPs and currently build one more

 

I am also of the view that what will happen in 2021 will be depend on how the state and federal leaders conduct themselves in relation to the virus,
What I do think may happen this year and the next 3 years is property prices in all cities and regions will rise but purchasing power will be eroded as it is in times of inflation.
However after this period I fear that many people will have over stretched themselves and combine that with governments realising that quantitative easing has gone to far they will be obliged to pay some of that debt back and possibly at higher rates of interest, and this ain’t going to be easy.
What I keep reminding myself is that Australians are sitting quite pretty right now compared to the rest of the world and at some point the pain that the rest of the world is heading towards has to eventually reach here if they keep doing what they are doing.