Property experts give their tips on what 2021 has in store for Australians

House values have shrugged aside the coronavirus and surprised most experts. So what’s in store for the rest of the year?

Strong demand for real estate is set to propel prices higher this year despite the Federal Government’s financial stimulus winding back in the coming months.

Property researchers say there are several forces keeping home values high as cities that struggled in recent years are now doing well.

But it won’t be an even improvement, with houses generally tipped to perform better than apartments and regions expected to rise at different rates depending on their demographics, location and COVID-19 impacts.

Factors behind 2021’s optimistic forecasts include:

• Record low interest rates and Reserve Bank plans to keep them down.

• Tens of billions of dollars of government handouts flowing through the economy.

• Fewer fears that the end of JobKeeper wage subsidies in March will hurt homeowners.

• More lenient lending practices as the government plans to make credit approvals simpler.

• A return of investors to the property market, which was dominated by first home buyers in 2020.

Real Estate Buyers Agents Association president Cate Bakos.

CoreLogic’s head of research Australia, Eliza Owen.

Real Estate Buyers Agents Association president Cate Bakos said she believed prices would increase.

“One of the most significant reasons is the loosening of lending constraints … I think that will have a large impact on our markets,” she said.

Apartment markets were more volatile, with inner-city Melbourne and Brisbane hit by oversupply, Ms Bakos said.

“If I had to choose either houses or apartments as a camp to be in, I would choose houses and townhouses,” she said.

CoreLogic’s head of research Australia, Eliza Owen, said low interest rates would be a “significant tailwind” for property, and previous risk factors – such as the end of COVID mortgage repayment deferrals – had reduced.

Ms Owen said Melbourne’s growth might be lower than other cities because of an increase in properties listed for sale, inner-city Sydney would be subdued by international travel bans, and Hobart’s strong momentum of recent years might slow because of affordability constraints.

However, Brisbane, Adelaide and Canberra were likely to deliver robust growth, and Perth and Darwin were entering an upswing after years of poor performance, she said.

“Overall, the housing market outlook for 2021 is positive, given highly accommodative monetary and fiscal policy, signs of an economic recovery and many first homebuyer incentives remaining in place,” Ms Owen said.

Rebecca Jarret-Dalton is optimistic about the property market. Picture: Dylan Robinson

Realestate.com.au’s executive manager of economic research, Cameron Kusher, said property prices had been resilient in 2020, buoyed by buyer demand near record levels and low borrowing costs.

“It seems unlikely that these conditions will change, unless there is an unexpected surge in the volume of stock listed for sale,” he said.

“Overall, 2021 is shaping up to be a strong year for the housing market but certain areas will fare better than others.”

Mortgage broker and Two Red Shoes founder Rebecca Jarrett-Dalton said she was “very optimistic” about the property market in 2021 but uncertainty remained about a vaccine and economic recovery.

“I actually think we could see a revival of the roaring twenties,” she said.

“Our regional cities are also holding their own with growth, which is adding to a generally stronger property market.”

SQM Research expects home values to rise in all capital cities in 2021, but managing director Louis Christopher said people should remember that unemployment remained high, migration would be negative, and there was a surplus of inner-city units in Sydney and Melbourne.

“If there was another negative macro event in 2021, there is not much room left to cut lending rates further,” he said.

“Many in the community are starting to think they cannot ever lose on housing, that the Government will always be there to step into the housing market, if need be. And that is a scary idea.”

Tom Haylock and Julia Buckland have been happy with housing’s price performance. Picture: Adam Yip

Tom Haylock and Julia Buckland bought their three-bedroom home in the midst of 2020’s pandemic panic and have been very happy with the resilience of house prices.

Mr Haylock, 32, said the couple had previously organised their finance approval and was able to move quickly and grab their Warriewood, NSW, property at a huge discount.

“Because of COVID an investor was panic-selling a bunch of his properties, and we jumped on it and got it,” he said.

“We were looking for a hell of a long time.

“One of our thoughts when we did buy it was ‘have we made the right decision’ even though we got a good deal, because house prices could plummet. But then I thought it’s not going to happen – Australia does not have enough houses to buy.”

Mr Haylock, a plumber, said the strength shown by house prices during the pandemic was a welcome surprise and he was happy about forecasts for more growth this year.

“I definitely feel lucky,” he said.

CAPITAL CITY 2021 PREDICTIONS

Sydney: Home values could return to pre-COVID levels if the pandemic is under control, but inner-city Sydney, Parramatta and parts of the Eastern Suburbs may be subdued until more international travel resumes.

Melbourne: A recovery trend is under way, but low rental demand and high apartment completions in inner-city Melbourne will hold back growth there. There is potential for property values overall to return to pre-COVID levels.

A house price recovery trend is underway in Melbourne, according to CoreLogic.

Brisbane: Strong population numbers in the Sunshine State will help deliver robust growth for Brisbane as the supply of new property moderates, internal migration continues and an appealing lifestyle attracts working-from-home professionals.

Adelaide: One of the best performers through COVID-19, Adelaide has low stock levels, high rental yields and lower prices attractive to investors, and could experience stronger-than-normal growth rates.

Perth: An upswing is under way after a long, large price correction of more than 20 per cent since 2014, and investor participation is likely to bounce back. Growth will reflect mining activity so watch developments with China.

Hobart: Annual growth averaging 7.7 per cent over the past five years has caused a price surge and this growth may be tested later in 2021. The gradual return of interstate travel should help the rental market.

Darwin: Momentum from late 2020 points to an upswing in 2021 after a fall in home values of 27 per cent since 2014. Low interest rates and rising mining activity have helped, and prices have now fallen far enough for buyers to take interest.

Canberra: Strong growth in 2020 has pushed home values to a record high every month since September 2019, and high incomes combined with low stock on the market should keep prices rising.

Source: CoreLogic

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