3 minute read
Property remains a safe investment
2020 has been a Property remains a safe investment tumultuous year, to say the least, and arguably one of the most extraordinary years for the Australian property market in history.
Let’s first look at what did not occur, despite many saying it would!
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What didn’t happen?
• House prices didn’t drop by 30 per cent or more. • Investors did not run for the hills. • The ban on open houses and in-person auctions, as part of social distancing measures, did not spell the end of auctions or the real estate industry. • We did not fall off an economic cliff at the end of September when
JobKeeper and other financial boosts from the government were either wound back or ended. • Nor did we do so in October when a number of investors’ interest only loans reverted to principal and interest. Despite doomsday predictions, history paints a different picture of property price resilience in Australia. House prices have rebounded after every recession or downturn in the past 50 years, including the early 1990’s recession and the global financial crisis.
- RE/MAX Australia Director, Josh Davoren
Despite the pandemic, 2020 turned out to be a pretty stable year for property prices in Australia. Our national market proved resilient and, at most, prices only softened slightly overall.
The real estate industry responded rapidly to the changing landscape and gave confidence to its customers as it continued providing sales and property management services.
Depending on the type and location of the home, owners and investors sold property in good time, often without having to compromise on price and, sometimes, for well above reserve at auction.
While the world hasn’t yet shaken COVID, this is not likely to deter market activity in 2021.
There is still evidence to suggest the Great Australian Dream of owning property still exists, with a significant proportion of first-time buyers having a new appreciation for the security of bricks and mortar. First home buyer activity across Australia was at a 10year high at the end of 2019, and this trend continued in 2020, encouraged by incentives, concessions and grants.
Then came the big spending stimulus with JobKeeper and JobSeeker, and the boost to housing construction through the HomeBuilder Grant. Australia coped nicely compared to other developed nations through a combination of government stimulus, three interest rate cuts and helpful lenders. In December last year, CoreLogic’s Head of Research, Tim Lawless, said housing values were likely to surpass pre-COVID levels by as early as January or February this year. Even the Reserve Bank of Australia governor, Phillip Lowe, was saying at the end of last year that it was a good time to buy. There are some economists bold enough to suggest strong, almost unprecedented, property market growth in the first half of 2021, possibly easing off in the second half.
Regional areas won popularity polls last year, largely due the work-fromhome shift along with a greater appreciation of ‘my own space’. Regionals outperformed the capitals in November 2020, with regional home values up 1.4 per cent compared to 0.7 per cent in the cities, and it is completely plausible that large parts of regional Australia will be the star performers this year.
The RBA is saying it is unlikely to lift interest rates for up to three years. Home loan affordability is at its best level in possibly 18 years. With affordability, a diverse local economy and a high demand for quality property, there will be sustained growth through 2021, especially with interest rates approaching zero.
Property owners have indeed found a new and deeper appreciation for the true value of bricks and mortar as assets, particularly in tough times.
