Property Prices Climbing
Victoria has quickly moved from a buyer’s market of a few weeks ago, to a seller’s market. Melbourne is presenting a trend similar to that of Sydney (8-12% growth in 2021).
The drivers outside of our ability to get on-top of COVID? Historically low interest rates, relaxed lending regulations, reduced stamp duty (VIC), increasing consumer confidence, a reduction of credit card debt (during lockdown) and a shortage of land. This is believed my many in the industry to have essentially created ‘the perfect storm’ when it comes to the property market.
Indeed the ‘buzz’ from many property industry insiders is that 2021 will be a boom year for property. According to property expert Michael Yardney, Victoria is anticipating an average growth rate in 2021 of between 8-12 per cent. This expectation is driven in part by Victoria’s ability to almost eradicate COVID-19 and subsequent unwinding of restrictions across the state.
As has been consistent over the past few years, houses are expected to continue to outperform apartments for growth, especially where there is an oversupply of apartment offerings in major cities.
We’re also reminded about the ’20-minute city’. The idea of people working, shopping, playing, educating, dining, etc. within 20 minutes of their home. The pandemic has shown us that we can be just as productive working from home as working from the office. This supports the 20-minute model as businesses reevaluate the need for office space. We may see less traditional office spaces moving forward, and more ‘plug-in’ or serviced offices as people continue to work from home beyond the pandemic. This could have an adverse affect on commercial property, especially in the big cities where retail has already taken a big hit due to COVID-19, reducing the need to travel into the city even further.
COVID has impacted migration, but this is temporary. What this means in the short-medium term is that we are likely to see more demand for family housing and less for apartments (for example, to house international students and others where their homeland is predominately apartment based).