The property market outlook for 2021

The Australian property market is booming. But will it stay that way after COVID-19 and what does it mean for home buyers for the rest of 2021 and into 2022? Anne Flaherty, Real Estate Australia Group Economist, and Drew Glascott, Metricon General Manager Sales, share their insights.

Why is the market hot?

“There is an enormous amount of heat in the market at the moment,” says REA’s Anne Flaherty. “Properties are selling at faster speeds than we’ve seen in the past, and a lot of the banks are actually forecasting double-digit price growth by the end of the year.”

According to Anne, there are three main reasons for the current boom, all of them linked to the impact of COVID-19:

  1. The Reserve Bank of Australia dropped the interest rate to a record low, meaning more people could afford to borrow
  2. People were spending a lot less money during the pandemic, increasing the household savings rate to the highest level since the 1970s
  3. Government measures, including the HomeBuilder Grant and First Home Loan Deposit Scheme, helped first home buyers get on the property ladder.

And although the HomeBuilder Grant has come to an end now, Government support continues to help keep the property market buoyant. The May 2021 Federal Budget, has:

As a result of these initiatives, Metricon’s Drew Glascott says: “We can’t see this very strong buoyant market changing any time soon. We think 2021 and 2022 are going to be years of high demand.”

Highlands community

What it means for home buyers – lifestyle-friendly opportunities in the suburbs

​Although demand for property is currently outstripping supply in some areas, the outlook is still positive for home buyers and builders. “The expectation around interest rates is that they are likely to remain low until 2024 at the earliest,” says Anne, adding that any overall price increase is likely to be at a slower rate than has been the case recently.

COVID-19 has also had a surprising benefit for home-buyers – by making working from home much more common. As a result, people are able to look further away from the city to find their forever home, with many finding that they are now able to enjoy a better quality of life than may otherwise have been possible.

Suburbs and communities located further away from the office are in increasing demand thanks to people only having to commute two or three days a week – especially as home-buyers are increasingly seeing how easy access to public transport lets them live a completely connected life.

“We’ve seen very strong growth in demand for larger houses on bigger blocks in the outer suburban and regional areas,” says Anne. “People are picking lifestyle over being near their offices.”

This lifestyle focus is reflected in a wish to have ready access to top-quality amenities like schools, parks, shops and cafés, with a sense of belonging, being around like-minded people and safety also highlighted as key reasons for people choosing to live in master-planned, environmentally friendly communities.

There may also be financial benefits to living further from the city, with savings possible on both existing homes and house and land packages. “Affordability is the key,” says Drew.
 

Mooba Cafe at Calleya

Working from home is also changing what people want in their houses

“Home designs are definitely changing as a result of COVID-19,” says Drew. “We used to see people want study nooks for kids to do homework, but now adults definitely want home studies too.

“They haven’t had that luxury during COVID-19 – they’ve been taking Zoom calls in the dining room with the kids in the background – so it’s now a priority when they build and design homes.”

  



Essential advice for home buyers

So how can you give yourself the best chance of getting your dream home?

“It’s always a good idea to keep your options open about where you’re going to buy,” says Anne. There’s a lot of infrastructure investment happening in various suburbs around the country and that’s probably going to improve the quality of life in those suburbs.”

Anne and Drew also stress the importance of being prepared – to be able to act when a new home or land release becomes available: “Make sure you have your finances in order, with pre-approval from the bank and all your documentation ready to go, so that if a property you want to purchase comes up, you don’t get left behind.”

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