There were lots of headlines in 2020 that caused fear for the readers of them and they were not limited to the pandemic. You might recall ones that screamed about a “housing market crash”. These are not new of course having been around for the last quarter of the last century and pretty much all of this one. The most recent prior to 2020 was in September 2018 with 60 Minutes trumpeting that property prices would “fall 40%”.
So with the national economy virtually shut down and hundreds of thousands losing their jobs and many more on Job Keeper, one might expect the residential property market would be drastically affected by the pandemic. But it wasn’t.
And here’s why.
Any and all markets are about supply and demand. With the onset of the pandemic, demand came to a grinding halt. No wonder with auctions and open for inspections across most states, banned for months. Sellers too decided to sit on their hands and see how things panned out. After all, you only realise a profit or loss once you sell, right?
This had the effect by and large of the property market going sideways. Yes there were price falls here and there, but to generalise ‘it softened’ as they like to say in the property industry.
So now in Australia at least, with the worst of the pandemic in our rear vision mirror, what will 2021 look like from a property perspective?
For the answer to that question, we can look to the various experts as a starting point. ANZ have revised their 10% decline to 9% growth next year. Westpac too is forecasting a 15% house price growth in 22/23.
If we look outside the crystal ball, we will see other market factors that will impact the continued surge in property market activity into 2021. These are:
- Record low interest rates which will remain low for at least the next 3 to 5 years
- Fixed interest rate loans of less than 2%
- Easing in lender policy encouraged by the Federal Government enabling higher borrowing levels for households
- A variety of state and federal government incentives
- High consumer sentiment
- Homebuilder Grant being extended
- Building approvals at levels not seen in 20 years
One question we are often asked at Deposit Power is “when is a good time to invest in property?” Our response is always “In hindsight, if you look back over the last 50 years and pick a year, almost always it proved to be a good time to buy a property. So why should now be any different?”
Right now, there has never been a better time in history when there has been a combination of such low interest rates and government support. So getting into property has never been easier. And as the last 90 years has shown, generally over time, you come out ahead by owning a property.
So after all that, is 2021 the year you and your clients will experience FOMO or JOMO?
*Article concept courtesy of Lee Wisniewski at Fidget Money