5 property market predictions for 2021
After a chaotic and uncertain 2020, many of us will be relieved the last year is behind us. Now, with the pandemic largely under control and clear signs the property market is steaming ahead, 2021 is looking to be an extremely promising year for investors. So, what can investors expect from the property market in 2021?
Savings will be invested in property
Australians have amassed a record $200 billion in savings in the last year and are now looking for ways to deploy that money into property or other investments such as shares. With interest rates so low, holding money in cash deposits won’t provide a genuine return. As buyers and investors return to the property market, it is likely we’ll continue to see strong growth through the various property markets around the country. Property markets in areas such as South East Queensland are likely to see significant activity, as they are fueled by interstate investors relocating from southern states.
Regional markets will continue to grow
With Australians embracing working from home, suddenly the opportunity to move out of our capital cities is a realistic and attractive proposition for many families. Many Australians will continue to relocate to regional markets as they look to secure a better and potentially more affordable lifestyle. Downsizers are also attracted to these more affordable locations as they look to cash in on their family home and utilise some of the proceeds for their retirement.
Sales activity in many regional property markets is already surging. The Byron Bay property market has grown by a whopping 40% and the Sunshine Coast property market by 25%. Other areas in close proximity to the capital cities are likely to continue to grow such as Wollongong and Newcastle in NSW, the Gold Coast in Queensland or Ballarat in Victoria. There will also be an uptick in sales activity in holiday destinations as Australians opt to buy holiday homes in lieu of being able to travel and spend money overseas.
Interest rates will remain low
Record low interest rates are likely to continue, motivating buyers and investors to borrow. The RBA has noted that interest rates are likely to remain at historic lows for quite some time to come and are anticipating rises in property values as a result. Given that the costs of holding an investment property have never been more affordable, investors are likely to take advantage of this in 2021.
Consumer confidence will continue to grow
Consumer confidence is actually higher now than it was this time last year, before the pandemic even hit. This is quite incredible given the year we’ve had. Strong consumer confidence will contribute to more spending and fuel economic growth across the country. We’re likely to see more sales activity and pressure on supply in many of the property markets as a result.
In a post-pandemic environment, Australia will stand out
Australia has an excellent track record when it comes to COVID-19. With other countries such as the US and the UK reaching grim new milestones every week, Australia has largely been spared. As a result, thousands of Australian expats are returning home. Roughly a fifth of Australia’s expat community has come home in 2020 which is a total of 43,800 Australians. Another 36,000 are still trying to get home.
Going forward, Australia’s enviable response to the pandemic will make Australia an attractive destination for migrants seeking safety and security. Once borders reopen we can expect a spike in overseas migration to Australia from places like Hong Kong (the government recently announced the extension of temporary visas for Hong Kong residents), the US, the UK and South Africa. That will include migrants seeking out a better quality of life in Australia, international students and returning Australian expats. This will offset the short-term dip in population growth and fuel strong demand for housing going forward.
If you’d like to know more about where the best investment opportunities exist right now, please reach out to the team at Binnari Property who would be happy to discuss this with you.