2020 in review and what 2021 might have in store
ITC has put together some highlights from the ‘Best of the Best 2020’ report compiled by Core Logic, the leading property information, analytics and services provider worldwide, to help our clients identify opportunities and mitigate risk in the NSW market in the new COVID era.
2020 in review – key points
- While the initial shock of COVID-19 led to a -2.1% decline in national property values between April and September, the trajectory of dwelling values began to recover through to November. Early data for December is showing a continuation of this trend.
- CoreLogic research from the beginning of this year outlined the relatively stable nature of property as an asset, which historically has not shown the same volatility as shares and equities, due to the illiquidity of the asset associated with long transaction times, high transactional costs and lengthy hold periods.
- Demand for lifestyle areas may have been exacerbated, but was not necessarily triggered by, COVID-19 – annual growth across combined regional Australian dwellings at November 2020 was 5.7%, compared with 2.4% across the combined capital cities.
- Sunshine Beach on the Sunshine Coast has seen the highest annual capital growth in houses nationally, compared with 2019 when St Kilda in Melbourne saw the highest housing growth.
- Rental market performance has been highly disparate due to COVID-19 impact – inner city rental markets of Sydney, Melbourne and to a lesser extent, Brisbane have been particularly impacted by the closure of international borders
Top performing capital city suburbs
Top performing regional suburbs
NSW Best Performers 2020
Greater Sydney Best Performers 2020
Regional NSW Best Performers
2021 Property Market Outlook – expected trends
- RBA Governor Phillip Lowe signalled that the cash rate may be held at record lows for years to come and this will be a significant tailwind for property values and may place upward pressure on prices through 2021.
- Inner city Melbourne markets are at greater risk through 2021 as strict restrictions on international borders have affected rental demand (inner Melbourne has the highest net overseas migration of any region in Australia in the year to June 2019, at 17,975). Rental incomes have declined10.7% and property values fell 6.1% in this sub market. Values are likely to under-perform until the relaxation of international border travel.
- The return of investors to small capital cities following record low participation, if there’s a rebound in rents.
- Institutions are shaping finance and construction due to fiscal stimulus for the establishment of new property – there was a 39% increase in construction loans for owner occupied property compared to same period in 2019.
- Owner occupied preferences and first home buyer/home builder schemes have created a shift in demand from high density, inner city projects to house and land developments on the periphery of greater capital cities or in regional Australia. The extension of the Home Builder scheme to March will see this trend continue.
- Current high levels of demand from first home buyers may be subject to decline in the second half of 2021, as schemes may be gradually tapered off.
Looking to buy a property and need advice and finance approval?
ITC offer advice via Adam and home loan recommendations/approvals via Sam (ITC’s in house finance broker). Please contact us to make an appointment.
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