Are you, or someone you know looking to buy a property this year?
Statistics suggest that more than two-thirds of Australians believe NOW is a good time to buy real estate.
So, chances are it is either you, a friend, a family member or even all of the above.
Of course, it will be another few months before what our team at Metropole are currently seeing on the ground will eventually filter through to data companies and the media.
Sydney has started with a 90%+ auction clearance rate, Brisbane has open homes with lines 100 meters long and momentum in Melbourne is also building, as it breaks free of Lockdowns.
But why has 2021 started in such a rush?
Here are my thoughts…
Greater Disposable Income
Clearly our spending has been down on many fronts.
According statistics released by statista, Australians spent almost $65billlion in overseas travel in the year before we were locked down.
There is clearly going to be significantly less spent overseas in 2020 and 2021, with overseas travel slated for a return in early 2022 at this stage.
Note: the years in the chart above are for the 12 months finishing 2019 and the 12 months ending in March 2020 before Covid closed our borders
So where are the missing billions going?
It appears a big part of it has been either saving or taking the opportunity to pay down debt.
Obviously, those Aussies who take a regular overseas trip will have the additional disposable income to spend.
This is starting to show out as new car sales surge and our property markets heat up.
In some cases, the additional income may be a prompt to buy a new home or upgrade their existing place of residence.
Others now have the ability to enter the property market as an investor or add additional assets to their portfolio.
It is certainly looking that way for Owner Occupiers, up sharply, with investors just beginning to return to the market.
The upturn in finance approvals would likely not be happening without some level of confidence in our economy and property market.
This is highlighted by Roy Morgan Research, as Consumer Confidence hits 14-month highs and surges past pre Coronavirus levels.
As we come out of Lockdowns around the country and return to some normality, this is understandable.
But there is also far less doom and gloom from the media and much of the doomsday forecasts and predictions have not eventuated.
- Also read:This weekend’s auction clearance results Saturday May 28th – Markets steady despite post-election surge
- Also read:These are the most affordable suburbs within 10km of each CBD
- Also read:Beware of the unintended economic consequences ahead | Property Insiders [Video]
- Also read:Is there a looming schools shortage?
- Also read:Making an offer on a property – What price should you offer?
There was also that dreaded “mortgage cliff” the property pessimists kept talking about, which is becoming less of a concern as the weeks go buy and people begin to repay their loans.
The latest figures from APRA suggest that loan deferrals have fallen from a high of more than 10%, to be back down to less than 2% in December.
Unemployment also never reached the predicted 10% - 20%, as people are returning to work and job ads start to increase.
All very good reasons to have a level of comfort and greater confidence heading into 2021.
In fact, the falling level of potential bad debts is giving the banks confidence to lend more freely.
Building up even more confidence has been recorded low-interest rates, with a cash rate of almost 0%.
Amazingly, most home buyers have access to a home loan with a 1 in front of it.
I recently reviewed a case study form back in 2010 and noted an interest rate of 7.25%, those days are long behind us.
There is talk of major issues once Job Keeper and Job Seeker has come to an end, but with the amount of buyer demand in A Grade locations of our bigger capital cities, concern is easing.
If you have a steady job, a regular income and have been relatively unaffected by COVID, there has never been a cheaper time to borrow money.
Buyers probably also have more certainty than ever with interest rates going nowhere soon!
The market has certainly shifted a gear as we head into 2021.
With data lag, it may be a while before the general public and media pick up on this shift.
Digging a little deeper and it appears to be three main factors that are driving this increase demand for property.
- An increase in disposable income due to things like overseas travel have seen people relocate their spending and paying down debt
- With the bigger COVID issues now under control, consumer confidence has also reached 14-month highs and growing.
- Perhaps the biggest drawcard however, is interest rates with owner occupiers having access to the cheapest money on record.
These unprecedented lows have seen owner occupiers upgrading or relocating in record numbers, with certainty and confidence in the short to medium term environment.
Investors are also starting to work their way into the markets and this will continue as our economy continues to strengthen.
Prepare yourself, we are in for another incredible year, perhaps this time for a different reason though.
Now is the time to take action and set yourself up for the opportunities that will present themselves in property this year.
If you're wondering how to take advantage of the new property cycle you can trust the team at Metropole to provide you with direction, guidance, and results.
Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level.
In “interesting” times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that's exactly what you get from the multi-award-winning team at Metropole.
If you're looking at buying your next home or investment property here's 4 ways we can help you:
- Strategic property advice. - Allow us to build a Strategic Property Plan for you and your family. Planning is bringing the future into the present so you can do something about it now! This will give you direction, results, and more certainty. Click here to learn more
- Buyer's agency - As Australia's most trusted buyers’ agents we've been involved in over $3.5 Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney, and Brisbane bring you years of experience and perspective - that's something money just can't buy. We'll help you find your next home or an investment-grade property. Click here to learn how we can help you.
- Wealth Advisory - We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
- Property Management - Our stress-free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years, and our properties lease 10 days faster than the market average.