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Knockdowns and urban sprawl: Four property predictions for 2021

property predictions for 2021

The property market was nothing short of unpredictable and difficult to read through 2020.

Yet we look to be entering a year where all the economists and property research houses are predicting positive growth across all markets. Who would have thought?

There will be anomalies, of course, but here are the trends you can count on in 2021.

Affordability and lifestyle: Regional centres within 90 minutes of Sydney and Melbourne

Housing unaffordability has been driving this social trend and COVID-19 has come along and really amplified it.

With densely populated cities more expensive and harder to navigate, and in some cases, due to lockdowns, not offering the quality of life we all crave, many saw 2020 as a year to reflect and redirect themselves to outer regions where price point and lifestyle is more favourable.

We already see this in Queensland, where only 48% of the population live in the capital city of Brisbane and the rest is dispersed out to major hubs such as the Sunshine Coast and the Gold Coast, Toowoomba, Ipswich and many more.

For context, 76% of Victoria’s population live in Melbourne, while Sydney sits at 65%.

The towns must have adequate transport and ease of access to main arterials.

Getting to the capital cities will still be important for these sea and tree changers, as will the central location within the town.

Walkability and education are important for families as are healthcare services for downsizers. Keep this in mind when assessing the property itself.

These regions are also sought after by investors who are keen to establish a ‘foothold’ in one of the holiday regions, such as Daylesford, the Mornington Peninsula or the Bellarine Peninsula.

With a number of factors — such as less overseas holiday travel, low-interest rates and less commuting — allowing for more cash in the bank and a greater focus on what matters most, families want to secure an ‘escape property’ for themselves, a destination they can flee too should lockdowns or pandemics strike again.

More ‘knockdown and rebuild strategies’ in the middle-ring suburbs

According to McCrindle Research, 78% of people surveyed believe working from home is here to stay with most expecting this to be two or three days a week.

But how many of us actually have the space to do this, especially in dual-income houses?

Renovations can be expensive and unpredictable.

Whereas the growing trend of knocking down an old 150 square metre, 1950s–1970s weatherboard or brick home, on 400–800 square metres of land, and replacing it with new build, can not only solve the working-from-home problem, but also result in a very profitable project.

Our smaller cities take flight

With less interest in moving to the big smoke from our smaller cities, natural-born residents will consider staying put and working in their home cities while the uncertainty is around.

The big question is, how compelling will this be in the long term?

The big cities of Melbourne and Sydney house our largest institutions, banks, insurers, super funds and the head offices of most major corporates outside of mining and resources.

They will eventually draw talent from interstate and overseas, and although moving home to Adelaide or Brisbane might be possible if you’re already employed, landing a job from interstate and never being in the office is quite difficult, even impossible.

In summary, the smaller cities of Perth and Adelaide will be strong next year as residents stay put or head home, but in the long run, Melbourne and Sydney will prevail and deliver superior return on investment as they offer higher paying jobs for more people and this drives the property market.

Is the inner-city out of favour?

Apartments are not one property style on their own, there is low rise, high rise, concierge, and facilities, versus art deco walk-ups, with no lift, with plenty of character and charm.

And many more versions of these lifestyle-driven properties are often bought for convenience and affordability.

Generally speaking, the bigger buildings will suffer, although locations such as East Melbourne and Spring Street in Melbourne’s CBD are always sought after and rarely drop in value.

But is this the best place to invest in 2021?

No! Houses will always outperform in the inner-city regions as they are not building them anymore, if anything they are slowing decreasing in numbers to make way for apartments and townhouses.

It’s a simple supply and demand equation.

Expats will be heading home and if returning from New York, London, Hong Kong and LA will be used to the cosmopolitan lifestyle and see the capital city lifestyles as less congested and more liveable than where they’ve come from.

This influx of established wealth will make up for any city escapers who are selling down or moving to the regions.

The cities will bounce back and continue to be our central place of business, leisure and events.

The beautiful established parks and gardens, along with the best food and experiences in town, will draw people back. Plus, being ‘central’ with quick access to the best schools, arterials and major shopping hubs will mean these 3–10km regions will be highly sought after.

Article Source: www.smartcompany.com.au

Brisbane

Brisbane Housing Market Insights: February 2021

Brisbane Housing Market

Brisbane housing market insights for February reveals increased demand for houses has been underpinned by increasing consumer sentiment and a surge in interstate migration.

This resource, to be updated monthly, will collate and examine the economic levers pushing and pulling Brisbane’s housing market.

Combining market research, rolling indices and expert market opinion, this evolving hub will act as a pulse check for those wanting to take a closer look at the movements across the market.

So, what were the highlights across Brisbane’s property market throughout January 2021?

Brisbane median house and unit price values

TypeMonthQuarterAnnualMedian
All0.9%▼2.5%▲4.0%▲$527,826▶
Houses1.0%▼2.9%▲4.9%▲$583,902▲
Units0.4%▶1.0%▼-0.4%▲$393,177▲

^Source: Corelogic Hedonic Home Value Index – January

Brisbane housing market affordability

CityHousehold income to meet mortgage repayments September 2019Household income to meet mortgage repayments September 2020
Brisbane21.0%18.7%

^Source: Moody’s Investor Services – October

Brisbane prestige property ranking

CityGlobal ranking3-month change12-month change
Brisbane23rd-1.4%▼1.1%▲

^Source: Knight Frank Prestige Property Index – November

 

Article Source: theurbandeveloper.com

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Opinion

What’s different about this property boom?

property boom

If not for the backdrop of a global pandemic, you could be forgiven for feeling a sense of déjà vu as the property market shows all the signs of launching into yet another boom.

Auction clearance rates are at near-record highs, bankers are rubbing their hands together as lending takes off and many economists are predicting double-digit percentage gains in house prices over the next two years.

Latest quarterly figures from CoreLogic, when annualised, imply the national property market is growing at 11.2 per cent a year.

However, there are some big differences between the latest price upswing and previous booms in Australian bricks and mortar.

A glaring distinction is the market is overwhelmingly being driven by owner-occupier homebuyers, rather than investors, who turbo-charged the property surge of the past decade.

CoreLogic’s Tim Lawless says at the peak in 2015, property investors made up about 46 per cent of all new mortgage lending. Today, investors account for just 23 per cent.

Lawless says possible reasons could be banks’ tighter credit polices around interest-only lending, and softer conditions in the apartment market that many investors favour.

“Weaker rental demand, especially in the investment enclaves of Melbourne and Sydney’s inner-city unit markets, is likely a significant disincentive for investors,” Lawless says.

Peter King, chief executive of Westpac, has also described the investor market as “relatively quiet.”

“I wouldn’t say we’ve seen [investors] come back into the market yet, but conditions are looking like that’s a possibility, I think,” King said.

Another unusual feature of the latest property boom is that it is occurring amidst the slowest population growth since the First World War – something that you might expect to detract from housing demand.

Owner-occupier mortgages hit record levels

 

property boom

Source: ABS

What’s more, Mortgage Choice chief executive Susan Mitchell points out that the uncertainty of COVID-19 is likely to continue to hang over the market for months, as emergency financial assistance from banks and the federal government is withdrawn.

The mortgage broker’s half-year result also underlined another peculiarity of these times: while new loan growth is strong, there are also many customers repaying outstanding debt at a cracking pace.

So, if the property market is not being fuelled by investors or population growth, and coronavirus uncertainty lingers, what is driving prices higher?

All the evidence points to an owner-occupier bonanza. Australian Bureau of Statistics figures show new loan approvals to owner-occupiers surged 39 per cent in the year to December, while loan approvals for first-home buyers leapt by 61 per cent, boosted by government grants.

The surge is also a response to rock-bottom mortgage interest rates; when combined with a low supply of homes for sale, the result is strong price growth.

There is also a self-fulfilling dynamic at play in which people tend to jump into the market when they see prices going up, thereby drawing in more buyers. The phenomenon, known as “fear of missing out,” or FOMO, could further exacerbate price growth.

Experts say the unusual conditions suggest there is a divergent ongoing outlook for property – as opposed to yet another long-running boom.

Lawless is tipping national house price gains of 7-10 per cent but expects Sydney and Melbourne prices would be tempered to a degree by limits of affordability and their greater exposure to overseas immigration.

“I don’t think the market is fragile or is going to go backwards, but it’s hard to see housing values rising as quickly into next year,” Lawless says.

AMP Capital chief economist Shane Oliver also expects growth of 5-10 per cent, but says inner-city Sydney and Melbourne price hikes would likely be more constrained.

If FOMO catches fire and the boom starts to accelerate, the Reserve Bank of Australia (RBA) has made it clear that regulators would likely step in dampen the market. But for now, this looks unlikely.

RBA governor Philip Lowe this month said his main concern was “risky” lending from banks, not changes in house prices, but so far there had been few signs of a deterioration in lending standards.

 

 

Article Source: www.brisbanetimes.com.au

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Opinion

Westpac Forecasts 20pc House Price Gains

Westpac Forecasts

Westpac Forecasts 20 per cent gains in the housing market over the next two years.

In a report released Monday, the banking institution’s chief economist Bill Evans said he was expecting dwelling prices to rise 10 per cent nationally in 2021, and said the pace would continue into 2022, off the back of strong economic growth.

“The upturn is being supported by record low interest rates; the confident expectation among borrowers that these rates will remain low for years to come; ample credit supply; and an improving economic backdrop, as the roll-out of vaccines promises to bring the pandemic to an end and drives a sustained lift in confidence,” Evans said.

“The bottom line is that Australia’s housing upturn now has strong momentum that looks to be lifting further and will remain well supported by monetary conditions and an improving economic backdrop.”

Dwelling approvals surged 22 per cent in the final quarter of 2020, and new lending for dwellings lifted by 16 per cent in the December quarter, which Evans says demonstrates a robust and confident housing market.

“Most tellingly, buyer demand has run well ahead of ‘on market’ supply, with sales outstripping new listings by 34 per cent over the last six months and ‘stock on market’ down to just 2.5 months of sales—[where] the long run average is 3.8,” he said.

“A lift in new listings will no doubt be forthcoming but for now this is clearly a seller’s market.”

House prices forecast: Westpac

Westpac Forecasts

^ (as % change). Source: Westpac bulletin

Unsurprisingly it was the smaller capital cities and regional towns that were most likely to capitalise on these forecast dwelling price increases.

There was still concerns about lingering areas of weakness, specifically the Sydney and Melbourne high rise markets, but according to the Westpac Housing Pulse report they look to be a minor drag on the broader market surge.

Evans said it was the regions that had been largely unaffected by virus disruptions and benefitted from related shifts in internal migration flows that would see the biggest boost in property prices.

Evans said they were also predicting good news for the labour market.

“Australia is expected to see growth well above trend this year and next. The unemployment rate is forecast to decline steadily to 6 per cent by end of 2021, and 5.3 per cent by end of 2022.

“We now expect the upswing to generate stronger, double-digit, price growth near term while our expectation, back in September last year, remains that a policy response can be expected later in 2022 which will settle markets into 2023.”

 

Article Source: theurbandeveloper.com

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