Good news for residential owners and property investors.
Australia’s housing market has experienced a few inconsistent months. Apart from the normal market variabilities that housing markets are prone to, the COVID-19 pandemic has also contributed to the housing industry’s economic downturn, but it seems like there’s room for optimism this first quarter of 2021.
After 17 years, Australia has finally felt its highest market value rise last February. This is great news for players in the country’s housing market. After all, they’ll be able to close better deals and be more hopeful with their listing prices. Potential real estate buyers, however, may not find this ideal, but this certainly raises expectations for a market that has been on the rocks.
How have recent market value rises affected Australian city home values?
Housing markets across Australian regions and cities express the same sentiment – locally, they are having a relatively stronger performance. In smaller cities, the housing market’s rise is being felt exponentially: Perth reports a 4.2% rise in housing value. Darwin’s housing value has risen by 5.5%, and Hobart’s grew by 4.8%.
Bigger cities like Melbourne and Sydney have experienced a more slight rise in housing value: Melbourne has recorded an increase of 2.1%, while Sydney’s housing market value has risen by 2.5%. These figures are higher than previous values on a month-on-month average. Overall, it has been a positive first quarter.
What factors have brought about Australia’s housing market value upswing?
Last February, CoreLogic reported that Australia experienced a 2.1% rise in housing market value. This makes it the highest it has ever risen in 17 years. According to CoreLogic, this change is due to a combination of factors, including:
Low Mortgage Rates
Since there’s a high confidence level in the housing market, agents are more open to offering low mortgage rates to interested individuals. Low mortgage rates will make buyers even more excited, especially when combined with low-interest payments.
Economic Condition Advancement
Due to COVID-19, the economic stability of Australia has been shaky at best. The past year hasn’t been kind but the efforts to contain the pandemic are finally bearing fruit – the gradual re-opening of the businesses and work has resulted to an upsurge in economic activity.
People are beginning to return to a relatively steady source of income and have enough funds to secure investments they may have previously deferred and make mortgage payments.
Low Supply Levels
Australian demand for housing has been growing continuously. However, the listing supply remains below the average rate. Given these circumstances, the price of homes will generally go higher than the standard rate.
Will the supply level increase as housing market values continue to rise?
Theoretically, more potential investors will be interested in the housing market as values continue to rise, but that doesn’t necessarily mean that the increase in supply will balance out the housing costs in the long run; In the Australian housing market, buyer demand could increase at the same rate as the supply, implying that there won’t be a big change in relative cost on a month-to-month basis.
Upcoming Potential Roadblocks to Consider
In the coming second and third quarters of 2021, securing a property in Australia could become even more difficult. It’s a challenging year for consumers overall, but individuals looking to finally purchase properties may find such purchases to be even more costly, for the following reasons:
The Home Loan Deferral arrangement is going to expire soon
Australia has enforced the Home Loan Deferral arrangement to help its people cope with the financial downturn brought about by COVID-19. While this had been extremely helpful during the past few months, this arrangement is poised to expire soon.
This means that people need to start allocating part of their budget to repayments soon. The challenge is to ensure that repayments of people with housing mortgages are paid on time once the agreement winds down.
The Federal Government will lessen its fiscal support.
The Australian government previously had fiscal support arrangements to help its people cope with their financial woes in the midst of COVID-19. As the threat of the pandemic slows down, so will the government’s allocated financial support. For individuals relying on fiscal support to make ends meet given their mortgage repayments, this may pose a financial challenge.
The 2021 housing market, working in push and pull between sellers and buyers, is giving the advantage to sellers, so, if you are currently looking to buy or sell properties in Australia, seek advice from professionals and companies with experience in the industry.
Want to know more about Australia’s housing market values? Let Arnold Property help!
There’s a more to Australia’s housing market than supply and demand. You have to move smart to gain an advantage, and this is where we could help. Arnold Property is one of the premier real estate companies in Newcastle.
If you want to dive deeper into CoreLogic’s insights on Australia’s housing market values, seek advice from industry professionals like our team at Arnold Property by getting in touch with our experienced real estate agents to know what you should do in the current market regardless if you’re a buyer or a seller.