The property market went through a lot of upheavals during 2020. But despite predictions of a falling property market due to COVID, it held pretty strong. So, what should we expect from 2021?
We spoke with some top experts in the property market to learn their top predictions for 2021.
‘2021 is looking like being one of the best ever years for commercial property’, says Scott O’Neill, Director of Rethink Investing. ‘Low interest rates combined with consumer sentiment levels at a seven-year high and we’ll see a general flight towards property as people prioritise this investment option over others. This is great for investors, but the flip side of this positivity is that owners are more reluctant to sell.’
Jayne Robbins of The Informed Buyer agrees and believes this will also include residential property.
‘The short-term prediction is that we’ll continue to see shortages in residential property listings, but an overwhelming amount of demand from buyers. Prices will continue to rise well above expectations, while the number of days a property remains on the market will drop. This will lead to the stock sinking even lower. Buyers will need to research the market fully or they’ll find themselves continually missing out while stock is low.’
Jayne continues, ‘The February 2021 Corelogic Hedonic Home Value Index report gave us overwhelming data that it’s not just a shortage of listings but a higher demand that’s creating the stock shortages. Nationally, total listing numbers, which include new listings plus re-listed properties, were 27.8% lower than this time last year, tracking 29.3% below the five year average. And the number of national home sales over the past three months was 23.9% higher than the equivalent three month period from a year ago.’
Tight stock drives up prices and demand. Scott believes this will lead to above average capital growth on investment properties and cause investors to flock to high-yielding properties.
‘You earn basically nothing on your money in the bank anymore. But in the commercial property investment space, we’re seeing net yields of 7% plus, with interest rates under 3%. That’s a 4% gap where historically we expect to see a 2% gap. With commercial property bringing the highest possible yields in this economy, people are running to this space. The highest demand properties are industrial and medial properties, followed by retail and then office space’, Scott says.
‘This means, right now, there’s the opportunity of a lifetime to get the best cash-flow returns you’ll ever see out commercial property’, he finishes.
Alex Rutherford of ePlace says, ‘At the start of 2021 we’ve seen a huge resurgence of lifestyle buyers, and that looks to continue. Blocks of land close to green spaces, easy transport and, of course, schooling are all big draw cards. And offices and second living areas are also becoming very important.
But we’re also seeing buyers wanting to move closer into the city. In fact, the older generation who are looking to downsize are now looking at the $1.8 to $3 million apartments. These aren’t for investment purposes, but solely for lifestyle purposes’.
Richard Chai of Sunplace says, ‘South East Queensland is set to boom over 2021.
There were over 900,000 expats who returned to our area in 2020. The coastal lifestyle market has benefitted from those returning Australians, with vacancy rates in some areas dropping below 1%’.
2021 is also predicted to be a great year for first home buyers.
Phillip Harrigan, founder of Harrigan Property Group, says ‘It’s the perfect combination of low interest rates, available grants and affordability. First home buyers are realising that it makes financial sense when comparing weekly rental repayments against paying off a mortgage’.
‘44% of all our enquiries now are from first home buyers’, Phillip says.
Phillip also sees this as the year of Queensland, with buyers increasingly looking to our state to relocate or invest.
‘We are tracking more and more enquiries from the Southern states. In fact, in our analysis, 26% of buyers are interstate purchasers. Buyers who live in either Sydney or Melbourne, for example, are looking to Queensland, and in particular, South East Queensland, to set up their home base or even invest’, Phillip says.
‘These buyers are recognising that you can get more for your dollar in Queensland, plus the benefits of the Sunshine State lifestyle and a less dense living environment. Most of these buyers are looking to purchase property within 10 kilometres of Brisbane CBD. But others are wanting a coastal change or focus, to purchase some rural land or even invest in a hobby farm.’
Alex agrees, saying ‘Queensland’s so liveable, and we’re definitely seeing a massive uptick in enquiries from Melbourne and Sydney as people look to grab some of that lifestyle’.
Richard says that many of the retuning expats are looking to buy after settling in for a while. He says, ‘After renting for six months, a lot people are looking at buying now. Meanwhile, supply is very limited. We are down 18% from the same period of 2020. And land is hard to find not only for the mums and dads who are buying family homes but also for developers. Each of these factors will continue to increase the low stock of 2021’.
The 2021 property market is an interesting one, with plenty of challenges and opportunities. But you do have to be prepared.
When it comes time to buy, whether it’s commercial or residential properties, you need to be prepared. Jayne says, buyer’s will need to be ready to make quick and confident decisions to ensure they are ahead of other interested parties. If they aren’t ready to move, they will miss out.’
If you’re a renter it’s a good time to look at what your financial position might be if you were to purchase a home. Low interest rates and government grants put you in an even stronger position than usual, so if you’re thinking about buying your first home, 2021 might be a great opportunity.
Many people worry about commercial property investments, thinking it’s outside of their reach. But it certainly doesn’t have to be. And in the current environment, you will be getting a cashflow advantage.
Scott O’Neill is the Director of Rethink Investing, a BRW Fast 100 company (2017 & 2018) and Australia’s number one buyer’s agency for commercial property investors.
Jayne Robbins is the founder of The Informed Buyer. As a buyer’s agent she works to support and represent owner-occupier buyers to purchase homes within the inner Brisbane market.
With over 12 years of experience across Brisbane Real Estate, Phillip Harrigan and the team at Harrigan Property Group helps clients with all their real estate requirements whether buying, selling or renting.
Alex Rutherford is an award-winning property agent with ePlace. With 20 years in the industry, she is an expert at bringing buyers and sellers together.
Richard Chai is the Director of Sunplace Property Group, a property service company that. provides solutions to first home buyers and investors.
Gayle’s career included numerous chief executive roles with ANZ that spanned the globe. She took the bold step out of the corporate world and into the financial broking sphere with the establishment of Stapleton Finance. She assists her clients by approaching wealth management and financing holistically.
2021 will be a year of challenges and opportunities for property financing in Brisbane. If you’d like some advice on your current financial position, give us a call.
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