The Australian love affair with property
There wouldn’t be a headline today that would dispute the incredible momentum that’s currently in the property market.
It seems that whoever you talk to, there is raised debate as to what is actually fueling the demand and more importantly, what’s likely to happen for the balance of 2021 & beyond. Will the momentum continue, or will it subside? Will prices continue to rise, flatten or reverse?
If we have ever needed a crystal ball, wouldn’t we all have loved to have one in our possession right at this very moment!
As real estate agents who are continually at the coalface of the transaction between seller, buyer, rental providers & rental occupiers, we are in an extremely fortunate position to sense the mood of the market well before any statistical data presents the true story. Noting that ‘property data’ is after the fact, not prior. We have the advantage of analyzing both.
Needless to say, our record breaking January to March Quarter saw our team sell almost nine properties each and every day. In total, 792 changed owners to the value of almost $620 million, with the highest sale being a holiday home in San Remo Victoria for $5.59 million. Our extraordinary start for 2021 further confirmed my personal prediction this time last year that we would see our centuries ‘roaring 20’s’ decade. Time will only tell if I ultimately I get it right or I get it wrong – but in any case, should it matter?
I have a philosophical view point for those who are traversing the current (or any cycle for that matter) property market; in whatever capacity, buyer, seller, investor or occupiers. In the first instance, I believe trying to ‘predict’ the market is a dangerous strategy on its own. To be able to make an informed decision, I like to apply the following fundamentals to help in the decision process.
Australians have an absolute love affair with property. This gives me strong confidence that our appetite will continue well into the future and whilst we may see variations in strength, property will continue to feature high on the ‘want’ lists of your every day Australian. We all need shelter to live in!
- Long term interest rates remain low and for an extended period. Despite discussion of ‘affordability’ often surrounding strong price increases, banks have very tight lending criteria and whilst it’s more difficult and it’s taking longer to receive loan approvals, this provides me confidence that the growth is a measured response to demand.
- Unemployment. This one for me is the big one because regardless of interest rates being high or low, if you don’t have a job, you cannot get a loan. Interestingly, my recent discussions with employers and business owners in many sectors, have said that demand for employees is very strong. Everyone I’m speaking to is wanting and or struggling to find good talent. Again, this leads me to believe we are well placed with our employment position.
- Let’s talk about the pandemic that many predicted will result in an economic cliff. Now adding my caveat that I am not a world economist (or local for that matter), I get the sense that for Australia, we have battled through the worst and all indicators are showing a very positive outlook. Having said that, I do wish to raise and acknowledge that many in our country have been extremely adversely affected by the pandemic and economic hardship, loss of businesses & employment, (let alone the strain on health and well-being) and continue to do it hard. We can only hope that the bounce back reflects positively to those worse affected.
- Last but not least, population growth. Australia is a growing country and whilst immigration has all but ceased, this situation is only temporary. Once our boarders are open and it’s safe to do so, we will revert to allowing immigrants to enter the country further adding pressure to the property market and adding to demand. It’s predicted that we will be at a population of over 35 million by mid century.
The above are my general assumptions and whilst the accuracy of my predictions may be debated, applying a common sense approach to any property decision based on your current circumstances is the most prudent. When dealing in property, basing decisions based on the ultimate use of the property, is the most logical. As an example, if you are purchasing for the family home, stretching the budget slightly to purchase what you desire is a great move. On the other hand, paying over the odds for an investment property may not. In this instance, the numbers need to add up.
Overall, I believe the property market is in safe territory and if your current circumstances places you in this period of time to be making a move, then it’s the perfect time to be in the property market.
About the author: