10 Australian Real Estate Market Predictions For 2021
The world has seen a progressive drop in the economy with small to large scale businesses alike going out of business or having to let go of their staff members. Although this year hasn’t been a good year for the general population of the world, it seems like the 2021 prospects of the Australian real estate market has been significantly affected.
Australia has also been affected by this with the Australian wildfires that ravaged the entire continent, destroying properties, killing wildlife, and placing great financial strains on the national economy.
Like most sectors of the economy, the Australian real estate market has seen a general decline in the value rate. The ongoing pandemic seems to have taken a toll on property value. However, it’s not all doom and gloom as we look to the upcoming year of 2021 whose market predictions are offering great promise.
FACTORS THAT MIGHT INFLUENCE THE AUSTRALIAN REAL ESTATE MARKET IN 2021
Several factors are at play on how well the real estate market value will fare in the coming year. Some of the factors which are important to note and hold influence include:
1. Rent Prices in Australia
The property observer stated that rent prices fell 0.3% in June and 0.5% over the quarter. Capital cities seemed to have taken the bigger hit, having fallen by 0.7% over the June quarter compared to the more favourable situation of regional Australia, which rose by 0.2%.
2. New Home Listings
According to recent research, the number of new property listings fell 50% between mid-March and the first week of March. This is an unfortunate event in the world of real estate, especially in cities like Sydney and Melbourne, which seem to have been more affected than other cities.Despite a drop in prices, the value of real estate returned to its average price just three weeks after, reflecting the market’s resilience.3.Unemployment Rate
With an insufficient source of income, more Australians might have to put their homes on mortgage to assure financial security. Australia’s unemployment rate is an important factor, considering the knock-on effect it will have for the real estate industry. If unemployment rates continue to rise, the market will continue to drop and may fall into a slump. However, with an opportunistic attitude, Australia can begin retraining unemployed workers in areas of need such as the medical industry to boost the economy and lift market prices. Sweden has effectively applied this concept, retraining laid-off flight attendants to assist in understaffed hospitals.4.Consumer sentiment
Whilst there may be a sense of defeat and disillusionment as Australian’s continue to grapple, adapt and cope with covid-19, there is a collective spirit of resilience which shouldn’t be underestimated. Consumers may not be racing to purchase properties considering the financial stress many Australian’s are under, however, it’s possible we may see a shift in attitudes rather than a complete disinterest in the market.5.The Pandemic
It goes without saying that the ongoing pandemic has drastically altered our usual way of life. With social distancing and wearing a face mask being the new norm, people across the globe are transitioning into this new way of living. In light of such, it’s important professionals within the real estate industry recognise the importance to act in line with social sentiment.
THOUGHTS AND PREDICTIONS
With so many factors in place, some people wonder whether the falls in the property market will tank as predicted by the pessimist. Fortunately, this might not be the case as property markets have proved surprisingly resilient.
Of course, due to the current climate, the real estate market has suffered a great deal, but expert Michael Yardney also explained in his in-depth analysis of market predictions that the industry will be able to bounce back despite the times.
From a more optimistic point of view, one can see that Australia reports as having one of the lowest mortality rate across the globe.
As The Australian explains, “Australia has one of the lowest case fatality rates in the world for COVID-19, with experts saying that reflects high testing rates and the fact our hospitals have not been overwhelmed.”
What’s more, despite financial pressures, the economy hasn’t suffered as significantly when compared to the rest of the world.
It’s no news that Australia is going into a recession, and there’ll be a decline in the value of various sectors of the economy. However, the property sector might fare more favourably than other sectors.
The recession is not expected to last very long, hopefully making it easier for the property value to bounce back up. This will largely depend on the rate of unemployment and the level of consumer confidence when Australia comes out of its recession.
The worst-case scenario is that the pandemic persists and takes an even more significant toll on the economy. However, if this scenario does occur, there will be sectors of the market which benefit and others which suffer. What’s likely is that the gap between rising and declining local markets grows.
However, if the pandemic is curtailed in time, there’ll be a progressive increase in property value regardless of the hit the economy has already taken.
The most likely scenario is that property value experiences a modest price fall in some areas and remains steady in others.
For example, as Australian’s look to embrace local travel, beachside properties and weekend getaway destinations may experience increased popularity whilst student rental properties may witness a drop.
In exploring market predictions for 2021, it’s clear there are a variety of factors which will influence your experience with with the Australian real estate industry. Your current financial position as well as your level of confidence are important fundamentals which are worthwhile considering. What might be most important, however, is continuing to do your research whilst consulting with a reputable real estate agency and financial adviser before making any purchase.