Not long ago, doom and gloom headlines about the property market were dominating media reports across the country. During the pandemic’s peak in Australia between April and September, housing values dipped by 2.1%.
What a difference a few months can make.
In the last three months of 2020, Melbourne real estate values increased by 1.5% to a median of $682,197, while in Sydney they were up by 1.3% to $871,749, according to Core Logic data.
Across the capital cities, housing prices rose by 1.8 per cent and 4% in the combined regional markets during the same time period.
And buyers were eager. Buyer numbers jumped in the second half of the year. There were almost 8% more sales over the year compared with 2019.
Now, the Reserve Bank of Australia is watching the market very closely to detect risks in the market overheating, according to CoreLogic’s Head of Research Tim Lawless, due to unprecedented low interest rates pushing up property prices.
An internal report by the RBA included research showing that a permanent 1 percentage point reduction in the cash rate would push real estate values up by 30% over a three-year period. Even a“temporary” cash rate cut would increase prices by 10%.
The official cash rate has been axed from 0.75% in early 2020 to the current 0.10%, which Dr Philip Lowe has indicated will remain for at least three years.
With prices rising for three months in a row and buyers out and about taking advantage of low interest rates, it’s evident that Australia’s property market recovery is underway.
The RBA even stated in its most recent monetary policy meeting that the economic recovery has been “generally better than expected”. The central bank expects the country’s GDP to grow by about 5% in 2021 and 4% in 2022 – promising figures indeed.
Closing the door to migrants and international students
While our economic recovery is picking up,there’s one area with a fair bit of uncertainty: international border closures.
With the country not opening up to foreigners any time soon, the impact of border closures is being felt by our industry, particularly the rental market. The decline in net overseas migration has been a factor in falling rents and high residential vacancy rates in inner Sydney and Melbourne areas.
Prime Minister Scott Morrison said in May 2020 that net overseas migration is tipped to plummet to about 34,000 in 2021, a fraction of the government target of 210,000.
And it’s not just migrants who buy and rent our real estate.
In some of the most telling figures of the border closure’s impacts, international student numbers plunged from about 40,000 in March 2020 to just 30 the following month, Australian Bureau of Statistics data showed. Between April to November 2020, we have had less than 700 international students arriving in Australia.
Are people returning to work?
If you’re reading this while working from home, you’d be far from alone.
COVID-19 has accelerated the normalisation of remote working.
Despite working from home expected to taper off, it is still expected to trump the level seen before COVID by a whopping 69%, research from the NSW Innovation and Productivity Council found.
So, we can be certain that remote working is here to stay at least in some form. It won’t mean the death of the city, but expect to see a shift in where and how people live.
People are becoming more willing to live further away from CBD. This is already driving up rents in middle ring/outer suburbs and regional areas, while rents in inner locations come down.
Expectations of the types of housing features are also changing. Demand for properties that come with home office is climbing. For some, the standard study isn’t going to cut it, with some forward-thinking apartment developers even planning to incorporate co working spaces within their new developments.
Spotlight on the Mornington Peninsula
Demand is increasing for “lifestyle” markets as more people work from home.
An increasing number of Australian city dwellers want the lifestyle and spaces that comes with living away from the cities, but without the financial expenses of living in a capital city.
One of the most popular regions for sea changers in Victoria is the Mornington Peninsula.
Asking house prices have climbed by 2.6% to$765,308 in the past quarter, while unit prices have gone up by 3.1% to $538,229, according to SQM Research.
The majority of Mornington Peninsula property owners are making money, with 97.4% of those who sold in the three months to September 2020 making a median profit of $347,500, the latest CoreLogic Pain and Gain report showed.
The market has been so hot that some buyers looking at properties on the Mornington Peninsula are making offers just days after listings come up, Domain has recently reported.
And it’s not just the buyers. Median weekly rents for houses have jumped by 4.9% since a year ago to $430,while for units they’re up by 4.5% in the same period to $345.
In particular, Sorrento house rents have ballooned by 25 per cent over 2020 to a median weekly rent of $650, according to Domain figures.
Yet even with the prospect of paying these rents, you’d be hard pressed to find a home to rent on the Peninsula, with the vacancy rate at just 0.7%.
If you’d like to tap into the white-hot Mornington Peninsula market, it makes sense to have a property expert on your team giving you insider tips and advice. Our access to exclusive off-market properties could give you the edge you need to come out ahead in a competitive market.
Our latest Mornington Peninsula Acquisition
" After more than 12 months of searching and missing out on properties we engaged Tonya as our buyers advocate and we couldn’t be happier with the service. Within a few weeks she had secured our dream property and we were so impressed with her professionalism, market knowledge and the support & guidance she provided to us. Our only regret was not engaging Tonya earlier. " - Jenny Davis