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Why Australia might lead the property world in 2021

Why Australia might lead the property world in 2021

Back in March 2020, property forecasts were dire. Some pessimists predicted housing prices would drop by 10 or even 20% over the next couple of years.

Fast forward ten months, and the landscape is very different. Not only have real estate prices stayed relatively stable, but Australia is poised to lead the world in a 2021 recovery.

Why? Our decisive handling of the COVID-19 pandemic means that we’ve been able to lift restrictions earlier than other countries. The RBA has cut rates to near-zero, boosting confidence in first home buyer and investor markets. And as most business returns to normal, consumer confidence is soaring.

Property prices are on the rise

Property prices are already on the rise. CoreLogic recorded national rises in both October and November, recovering their lost ground and more. While prices dropped 2.1% between April and September, they went up 0.4% in October and 0.8% in November. That means that nationally, they’re only 0.7% below their pre-COVID levels. And it’s worth noting that these are national prices. Regional prices are a huge 1.7% above March levels.

If that trend continues, prices will have beaten their pre-COVID levels as early as January 2021.

Three fundamentals for a strong recovery

Low interest rates provide certainty for buyers

In September, the RBA reduced the cash rate to an unprecedented 0.1%. It also stated that it will not

increase that rate until the unemployment rate drops and it is confident that inflation will stay between 2% and 3%.

Realistically, this means that rates will stay at rock bottom for at least another two or three years. This has allowed first home buyers and investors alike to make informed decisions about what thy can afford.

Decisive pandemic management has allowed Australia to return to near-normal

Back in March and April, nobody knew if COVID-19 would rage out of control. It seemed likely that it would, given the example set by the rest of the world. Economists braced for the economic fall out that would follow school and business closures.

As we near the end of the year, it seems clear that Australia has managed the pandemic better than most. With the opening of internal borders, tourism and hospitality are surging. Other businesses have adjusted to new ways of operating or continued as normal.

The consequent economic recovery has boosted buyer optimism. Most experts now expect house prices to rise in 2021.  That’s not just in Melbourne and Sydney, the hardest-hit areas during 2020, but nationally.

Buyers are much more confident about keeping their jobs than they were a few months ago. And for those who stayed employed throughout the pandemic, the restrictions on holidays and eating out have made it easier to save.

The result is that they’re snapping up properties as soon as they come on the market. Time on market, especially in regional areas, has nose-dived. Several regional Elders offices have reported that their new properties are under offer within 48 hors of hitting the market – such is the force of buyer demand.

International visitors are returning

The first trial plane loads of international students were flown into the country a week or two ago. Why does that matter? Because this is a huge part of the rental market in the major capital cities. Without international students, the rental demand (specially for inner city apartments) has gone down.

If these trials are successful, those problems disappear. And because the pandemic is so well controlled in Australia, and campuses are open and safe, it’s an attractive place for students to come and study.

Perhaps the strongest indicator of all that a recovery is underway is this. At the moment, all immigration to Australia has stopped. And yet property prices are recovering. Once the borders are open again (and with news of a successful vaccine on the cards, it’s very likely that this will happen in 2021), that demand will only rise.

Australia’s strong recovery, low interest rate environment and high quality of life set the scene for a fantastic 2021. If you’re looking to buy, now is the time!

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