Australia’s housing market looks set to build on its impressive end to 2020 with buyers expected to continue capitalising on favourable market conditions and home values also predicted to rise.
A recent report has revealed that home values rose by 3 per cent across 2020, despite dropping by 2.1 per cent amidst the initial market chaos caused by COVID-19 between April and September.
The home value index report released today by CoreLogic also highlighted the success of Australia’s regional market with house prices outside the major cities rising by a whopping 6.9 per cent over the course of the last 12 months.
CoreLogic’s research director Tim Lawless says that lifestyle properties and lower density housing grew in appeal as the grip of the pandemic got tighter, forcing people to work from home and subsequently re-evaluate their living situation.
“Regional housing markets had generally underperformed relative to the capital city regions over the past decade, but 2020 saw regional housing values surge as demand outweighed supply,” he says.
Australia’s response to the pandemic coupled with financial incentives and low interest rates helped keep the country’s housing economy flying high with experts expecting market growth to continue surging.
“Containing the spread of the virus has been critical to Australia’s economic and housing market resilience,” Tim says.
“Record low interest rates played a key role in supporting housing market activity, along with a spectacular rise in consumer confidence as COVID-related restrictions were lifted and forecasts for economic conditions turned out to be overly pessimistic.”
Real Estate Institute of NSW CEO Tim McKibbin says that as long as interest rates remain low, 2021 will be a fruitful for year for the Australian property market.
“The historically low cash rate by the Reserve Bank’s own acknowledgement is unlikely to change in the foreseeable future, which will continue to provide confidence and growth in 2021,” he says.
“First home-buyers were especially active in 2020 and demand from young people will remain strong in 2021, fuelled by low interest rates and focused on more affordable suburbs, where we can expect an increase in first home-buyer activity.”
It should be noted that the modest annual house price growth is also down to significantly low levels of stock.
By the end of 2020, 21 per cent fewer properties were on the market than in 2019. Even when listing numbers peaked in late November with 165,000 properties for sale, figures were still 18 per cent down from the same time the year prior, and 22 per cent below the five-year average for the same time of year.
Effectively, more buyers than sellers caused the lower levels of stock to rise in value, which, coupled with homes selling faster, makes for a rosy picture as the market gears up for an exciting 2021.
“This imbalance between effective supply and demand is another factor that has supported a rise in housing prices as a sense of urgency returned to the market,” Tim continues. “With homebuyers outnumbering sellers, most areas around the country represent a seller’s market.”