It’s the positive news we’ve all been waiting for: the biggest asset that most of us own is set to grow in value in 2021.
This time nine months ago, we were in the thick of a financial crisis as coronavirus ripped through the community and the economy. Millions of Australians took out home loan holidays to stay afloat, and the media was awash with headlines proclaiming that property prices were set to collapse.
The number of properties selling nationally fell 40 per cent in April, but sales volumes picked up in the second half of 2020, says Tim Lawless, research director at CoreLogic.
“Dwelling values were pretty resilient – there were fewer buyers and also fewer sellers,” he says. “Peak to trough values fell only about two per cent nationally and bounced back quite quickly.”
Now, with confidence returning to the economy and investors returning to the property market, real estate values are tipped to increase in many areas of Australia this year.
So which cities are set to enjoy the biggest property price growth in 2021?
Are you ready to buy before prices soar out of your price range?
Lawless is predicting property price growth of between 7 and 10 percent this calendar year. But that forecast doesn’t apply across the country, and it doesn’t apply to all property types.
Lawless expects Brisbane, Adelaide and Perth to experience the strongest price growth, while Sydney and Melbourne markets are not expected to increase at the same rate.
Motivated by the prospects of positive cash flow and growing capital gains in markets that haven’t boomed in the last decade, investors are going to turn their attention to smaller cities such as Adelaide and Brisbane, Lawless says, which will absorb most of the investor demand this year.
“These markets are more affordable than Sydney and Melbourne… and we will see buyer numbers remaining very high because of low interest rates and [improving] confidence, providing we continue to keep COVID under control,” Lawless says.
In Sydney and Melbourne, growth will be more concentrated in the suburban housing markets rather than inner-city apartments, Lawless says. With listings down 21 percent on this time last year, lower supply will drive the property market over the next six months.
Tim Lawless isn’t the only property expert with a positive prediction for 2021. Simon Pressley, head of research at Propertyology, is also forecasting a property price boom.
But as with Lawless, Pressley doesn't believe all cities are set to grow in value this year, with Sydney and Melbourne the lowest on his totem pole, too.
Brisbane, Adelaide, Canberra, Hobart and Perth are his picks for big price gains in the year ahead.
“Having produced no growth for seven years, Perth has the potential to be Australia’s best-performing capital city property market over the next couple of years, and 20% growth this year is not out of the question,” he says.
Pressley suggests that many people over-estimated how significantly COVID was going to impact the economy and the property market, and now he believes the pent-up demand unleashed from all the buyers who didn’t take action over the last 12 months.
“I won’t be the slightest bit surprised if 40 or more regional Australian locations rack up 20 percent capital growth,” he adds.
Even if your property’s value is set to increase in value this year, that doesn’t mean you can afford to pay too much for your home loan.
Discover how to save money on your mortgage in less than two minutes.
.svg)
.svg)
.svg)
