the Australian Property Market 2021 and Beyond
The Australian Property Market. What should we expect in 2021 and the coming years?
Property Prices are Increasing Around Australia
There’s no doubt you’ve seen the media around property price increases over the past few months. As a country Australia has worked hard to lift itself out of the COVID-19 pandemic-induced recession.
Thanks to this, 2021 is looking bright for property prices! ANZ and other big banks are predicting house price increases of between 13% and 19% for every Australian capital city by the end of the year.
Perth and Sydney are predicted to be the fastest risers, at 19%. Adelaide is forecasted a steadier 13% growth and all other capitals primed for increase of 16%.
This rapid growth is expected to slow next year. ANZ are predicting just an average 6% increase across the board for 2022.
Why Are Property Prices Going Up?
There are a number of reasons why we’re seeing such astronomical numbers in property price increases at the moment.
Supply vs Demand
The age-old theory of supply vs demand is at play, with huge demand for housing and quality rental accommodation. The exception being CBD apartments which are typically filled by students and migrants – a market subsequently decreased due to COVID. This high demand, combined with low supply of quality properties is driving property prices up.
Vacancy Rates in The Australian Property Market 2021 and Beyond
Rental vacancy rates are tight in number of key areas. For example, many areas of South East Queensland have lower than 0.1% vacancy rate, meaning almost every rental property in that location is currently tenanted.
Low vacancy rates indicate a tight rental market. This means tenanting your investment property easier and there is a definite need for additional housing in Australia.
Rental Yields
The opportunity for high rental yields is also driving the popularity, and therefore price of properties in select suburbs.
Generally, the achievable rent on a $500,000 house & land package in the right pockets of Queensland is around $500 per week. This equates to a 5.2% gross rental yield – well above any bank savings at the moment.
When compared with a potential $420 in Melbourne or $400 in Sydney for the same initial investment, it’s clear why prices in these areas are out-performing.
What is the Future of the Australian Property Market 2021
As we continuously reinforce, there is no one “Australian property market”. The market can be divided by location, type of property, and so much more. Subsequently, this article we will focus on the most prominent section of the market for the coming years.
Based on the information and trends we have outlined above, we predict South East Queensland will continue to perform exceptionally well. The strong demand for housing and rental property will continue into the foreseeable future.
In addition to the general trends, there’s a myriad of additional factors contributing to the boom in South East Queensland.
Lifestyle
Queensland, or “The Sunshine State”, boasts a number of desirable lifestyle traits that sets it apart from other states. With warmer weather, high-quality beaches, and none of that “big city” traffic. It’s clear why people are flocking in hoards at the first opportunity.
Internal Population Migration
As a result of Covid, the workforces has become more decentralise. Subsequently, more professionals and office based workers are now able to work from home.
Many have therefore relocated to locations that promise a more desirable lifestyle. Over the 2020-21 financial year, more than 25,000 people relocated to Queensland.
“Anecdotally, we’ve been told some NSW & Victorian families have been living in caravan parks and other forms of temporary accommodation. This is while waiting to secure a rental property,” Adam Hindmarch, of Prospa Property Advisory, notes.
Subsequently, regional areas like the Sunshine Coast, Hervey Bay, Cairns and others are strongly impacted. Such locations are reporting the lowest vacancy rates and making them a definite winner for property investment.
Lifestyle Affordability
Adding to the driving factors for this stream of internal migration is the affordability and quality lifestyle in Queensland, compared to Sydney and Melbourne.
People from the big city locations are likely to sell their homes for upwards of $1.5m. They can then purchase a quality home that ticks all the desired lifestyle boxes for less than $1mill in SE Queensland. If you do the math, this leaves a fair chunk of change in their pocket to invest elsewhere.
Returning Expatriates
Australia is a country with a broad reach and our citizens have always spread across the globe. COVID has had massive impacts, especially overseas and subsequently many expats have chosen or been forced to return home seeking safety of Australia.
Some of the expatriates have lived overseas for a number of years. Many are also looking to rent or buy properties, further pressing the tightness of the market.
What to Expect with The Australian Property Market 2021 and Beyond
Looking further than the next few years, it is clear that Australia will subsequently become a popular place to live.
Australia has had impeccable track record in combating COVID-19 in terms of response and control of the spread of disease. Subsequently we have become a very safe place to live. Add to this the current economic growth and the appeal to international migrants is tenfold.
As a country, we have a skill shortage in a number of trades. So when the borders do open, we will need to rely on both skilled and unskilled migrants to boost our success. All these people will need somewhere to live.
HOW DO I START?
The biggest take away if you’re starting your property investment journey is to get an experienced and highly qualified team on your side. Furthermore, they will support you through and help you understand the process, and ultimately help your investment become a success.
If you’re looking for a property investment advisor, Prospa Property Advisory has a team of QPIAs (Qualified Property Investment Advisors) accredited by PIPA www.pipa.asn.au. We are also an accredited member of the Aspire Property Advisor Network.
Need help with property investment? Give us a ring on 1300 660 335, or email hello@prospaproperty.com.au to get in touch!
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