There are multiple factors driving the national property boom which is predicted to continue for some time yet.
A recent Hotspotting webinar featuring multi-award-winning buyers’ agent Rich Harvey of propertybuyer revealed there are at least 16 strong factors feeding the real estate up-cycle.
It’s not just low interest rates driving the market at a level Australia only experiences every 15-20 years, says Hotspotting’s Terry Ryder.
“The last time we had a truly national property boom was really at the beginning of the century, when pretty much everywhere around the country was showing big growth,” he says.
The current boom has been largely generated by the COVID pandemic and the responses by government, regulatory authorities and individual consumers.
Ryder says there are 16 reasons why he thinks the boom will continue for some time:
- A stronger than normal economy
- Lower than predicted unemployment
- State and Federal Government stimulus
- Savings have increased because of an inability to travel
- People in lockdown reviewing their life choices
- Ultra-low vacancies pushing up rents and prices
- Pent up demand
- Low listings
- Exodus to affordable lifestyle trend
- Increased infrastructure spending
- Revival of the resources sector
- Return of expat Australians
- Belated entry of investors to compete with owner-occupiers
- Uplift in buying by foreign investors
- Perception that bricks and mortar is a safe investment
- Access to low-cost finance
Harvey says he is asked every day when the boom will end and he doesn’t think it will be any time soon.
“If you’re wondering why prices are rising so rapidly one of the reasons is the constriction in supply,” he says.
“If you look at the actual volume of total listings on the market, you can see we’re down almost 25% on long-term averages. This is the reason we’re seeing such a rapid price increase at the moment, because there’s just not enough stock to satisfy demand.”
Harvey predicts it won’t be a huge spring selling season this year, as it will still be challenging for buyers to find stock.
Nationally “days on market” is now 29 days compared with 49 days at the same time last year and for every 1.4 properties selling there is only one new property listed for sale.
Rich says the median house price in Sydney has hit $1.3million while the unit median is $750,000. In Melbourne the median house price is $974,000 with units $568,000 and in Brisbane the median house price is $632,000 while units are $398,000.
“It’s just amazing how fast they’ve gone up,” Harvey says.
Ryder says the growth for the first half of 2021 in almost every market, city and regional, has been high.
“Sydney, Hobart, Darwin and Canberra, and the regional markets of New South Wales and Tasmania, are all up more than 20% that’s in the past 12 months,” he says.
He says the Northern Beaches has performed well in Sydney.
“Now that the boom is back on again within the Northern Beaches some of those suburbs have had upwards of 30% price growth. Other top end locations – including some of those very expensive eastern suburbs markets with median prices about $3 million – have had growth of 25%, 27% and as high as 30%.”
Ryder says the growth is happening across all price points in New South Wales, although perhaps not as significantly in some of the lower priced areas of the Greater Sydney area.
“Locations out towards Penrith and suburbs down in the far south-west, they’re showing double digit growth and as high as say 20% in Rosemeadow.”
Ryder says while Melbourne experienced some price drops in the early part of the past 12 months, it is now enjoying a big resurgence in prices.
In Melbourne the Mornington Peninsula is one of the best performers with extraordinary growth in virtually every suburb as a result of the Exodus to Affordable Lifestyle trend.
The Yarra Ranges and inner-city Brunswick suburbs are also doing extremely well.
While the Brisbane market hasn’t recorded much price growth in the past ten years it is “definitely in the ascendancy” now with Balmoral, Bulimba, Hawthorne and Norman Park median prices all increasing by more than 20%.
In the western suburbs, areas where the median house price is above $1 million, many suburbs are also up by more than 20%, as are middle markets in the north, such as Northgate and Sandgate.
The only market nationwide lagging in price growth is regional Western Australia.
Rich says that, eventually, there will be an increase in listings which will result in a moderation of prices.
“But I certainly don’t see prices going backwards,” he says.
He advises those wanting to buy in the current market to build relationships with as many agents as possible to try and get access to the off-market stock and not to buy sight unseen.
“Yes, you can do a virtual inspection, but you do have to have someone who’s qualified to go and look at the property on your behalf,” he says.
“You can buy remotely, but don’t buy it just through the agent, get someone independent of the agent, whether you use someone like us as buyer’s agents or someone else you trust.”
He warns against overpaying in the current market for fear of missing out.
