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Monday, April 19, 2021

Real estate 2021: Boom or gloom?

With the winding up of government support expected in March, Newcastle real estate agent Chad Dunn says now is the time to prepare financially to avoid a tough 2021.

The Mulligan Property Group employee says, while COVID-19 has seen a shift in what ‘home’ means to many Australians, the new year could see even more changes.

“The issues have already started,” Mr Dunn said.

“Now that the roll back of JobKeeper and JobSeeker has started, and most banks have stopped their mortgage holiday on interest payments, it’s time to start thinking about what happens next.

“In major historical recessions there is always one common event that happens before a crash – the top end of the market ‘booms’, which is happening right now in lifestyle areas.”

Mr Dunn’s predictions are backed by CoreLogic’s latest home value index revealing Australian housing values were 1.1% higher over the year to November.

Touted as Australia’s largest provider of property information, analytics and property-related risk management services, CoreLogic regularly provide data relating to the country’s real estate market.

CoreLogic’s Head of Research Eliza Owen said, with 2020 coming to an end, Australians were gaining more confidence in the property market.

Mulligan Property Group Chad Dunn.

“The year to October saw a remarkable 14.5% lift in the volume of finance secured for the purchase of property, according to ABS lending indicators,” Ms Owen said.

“The post-COVID mortgage lending boost was driven by owner-occupiers including changeover buyers such as upsizers and downsizers, as well as buyers getting into the property market for the first time.”

Newcastle property values

The news for Novocastrians remains positive, with CoreLogic’s regionals index recording a monthly growth rate double that of capital cities.

The former steel city featured almost a dozen times in the group’s 2020 Best of the Best Report released on Thursday 17 December.

Bar Beach was announced as regional NSW’s third highest median value for a house at $1.7 million, followed by The Hill in seventh place at $1.5 million.

Units in both Carrington and Newcastle ranked fifth and sixth respectively in the highest median value, both yielding more than $700,000.

A unit in Warners Bay increased in value by 12.2% during 2020 – the average price now $592,204.

For Hunter residents wanting to invest in real estate in 2021, Muswellbrook and Singleton are offering the highest rental yields for units, up 8% and 6.5% to $291 and $313 per week respectively in 2020.

“Both Sydney and regional NSW were back into the upswing phase of the property cycle in the three months to November,” Ms Owen said.

“Sydney dwelling values were up 0.3%, while regional values were up 3.1%. For regional NSW, this is the highest quarterly growth rate since 2017.

“Indicators are showing the regional NSW dwelling market is still on the rise, despite the recession.

“Every regional market in NSW has seen an increase in dwelling values since March through to November.

“Buyer demand is mostly being fuelled by a surge in owner occupiers rather than investors, looking to take advantage of historically low interest rates, generous government incentives and increased state of normality.”

State government incentives, including changes to stamp duty and additional building grants, are also supporting demand, CoreLogic claims.

Back to Basics

Australian financial comparison website Canstar has also weighed in on 2021 predictions, citing a return to basics necessary for financial survival.

In its fourth annual Consumer Pulse Report, released on 30 November, the Australian research agency identified that the property market outlook was among the greatest concerns for Australians.

For the first time in years property fears overtook financial concerns, savings, and debt worries.

Canstar’s Group Executive of financial services Steve Mickenbecker said 2021 looked likely to be the year of sticking to basics.

“This is the first time in four years that the cost of electricity and gas has moved from the number one financial concern for Australian households,” he said.

“Concerns around paying for groceries and job security have risen in the ranks this year in response to the devastating effects of the pandemic.

“Australians are in survival mode. Current financial concerns highlight peoples’ focus on sticking to the basics of putting food on the table and keeping a steady job in the year ahead.”

Mr Mickenbecker said the survey found 28% of Australians admitted they were not living within their means financially.

“The number one expense Australian savers are working towards currently is living costs, which was third in the priority list last year and shows many Australians are saving to get by right now.

“This is a trend that will shape 2021.”

Regional and remote areas to attract newcomers

The influx of city slickers into regional and remote communities will also increase next year, a new report shows.

According to an NBN Co survey conducted by YouGov and released last month, Australians wanting to relocate to their ideal community now see it as a feasible option thanks to the advent of working remotely.

Up to 36% of NSW residents surveyed between 31 August and 19 September 2020 said they were considering relocating after the pandemic.

The majority (65%) wanted to move to a regional area within the state citing the appeal of a quieter lifestyle, a desire to save money and wanting to live a more environmentally sustainable life.

The survey also identified the key elements NSW residents were looking for in their ideal community included plenty of green space, quiet streets and low traffic, and affordable housing.

NBN Co general manager segments Sam Dimarco said he accepted that, with more Australians moving regionally, a reliable network would be imperative.

“While this year has been challenging in many ways, it has also allowed people the chance to reconsider what is important to them,” he said.

“As more people look to embrace a more flexible lifestyle, the role of the NBN network as a crucial backbone supporting evolving ways of working and living is clear.

“We know that fast and reliable broadband is important to all Australians.”

Ms Owen says CoreLogic’s latest report supports the claim that Australians are seeking a lifestyle change.

“Demand for lifestyle areas is a trend that may have been exacerbated, but was not necessarily triggered, by COVID-19,” she said.

“The narrative of Australians fleeing capital cities in search of a sea-change or tree change “because of COVID” has dominated reporting on the housing market through 2020.”

Mr Dunn says, while news is positive in his industry, it will be remit not to warn people of ‘the storm that is coming’.

“It’s important to have savings on hand,” he said.

“Fix your interest rates, refinance to give yourself a buffer, offload surplus property with excess debt you don’t really need, have a licensed real estate agent give you an appraisal on your property, and revise the household budget.

“It is very interesting times and unpredictable times and even the experts may get it wrong at the moment, so err on the side of caution is always the best adage at these times.”

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