REA Group’s newly released Insights Property Outlook Report is tipping positive conditions to remain throughout 2021, with a few notable exceptions.
The REA Insights Property Outlook Report analyses property markets around the country and identifies key predictions for the year ahead.
The report details how – despite Australia plunging into recession and experiencing the worst economic downturn since the Great depression – a combination of low interest rates, increased consumer saving, record levels of government stimulus and only specific sectoral job loss buoyed the property market throughout 2020.
The market demonstrated remarkable resilience overall over the past year, with house and unit prices rising, although rental markets suffered, investor demand was low and new development slowed dramatically.
Key findings included regional property markets being forecast to continue to outperform metro markets, with views per listing on realestate.com.au jumping 44 per cent on average in regional Australia in the second half of 2020, compared with 16 per cent in capital cities.
Rental markets are forecast to improve but remain weak in inner-city and student-populated areas, with Victoria accounting for nearly 85 per cent of the increase in vacant units since the start of the pandemic.
First-home buyer activity accelerated during the pandemic, with searches on realestate.com.au up 62 per cent on the year prior but expected to moderate as investors return and the market heats up in 2021.
House and land development benefited from HomeBuilder and while the impact was more muted for apartment developers, the uptick in investor activity towards the end of 2020 was positive and a switch in new development type preference is likely to come.
Overseas search activity is also forecast to climb, particularly with interest from the US, UK, Hong Kong, and Singapore.
Nerida Conisbee, realestate.com.au Chief Economist and REA Insights Property Outlook Report 2021 author, said the momentum observed towards the end of last year was set to continue in 2021.
“Sydney is on a fast trajectory for growth, with particular strength in outer suburban areas, Northern Beaches and Central Coast,“ Ms Conisbee said.
She said the rental market for housing in the Harbour City was strengthening but there was still some weakness in the unit market.
According to Ms Conisbee, Melbourne’s prolonged lockdown had resulted in a slow recovery and although the luxury market was rebounding, it was not occurring as quickly as elsewhere.
“Expect strong growth in outer suburban areas and on the Mornington Peninsula but unit rental markets will remain weak,” she said.
“Brisbane is experiencing strong conditions, as is the Gold Coast and Sunshine Coast. Greater certainty on interstate borders will help population growth and housing demand.
“Adelaide did not see any price declines during COVID-19 and the rental market remains strong. At this stage, it appears that southern Adelaide will be the top performer in 2021.
“Perth is seeing the best conditions since the last mining boom, with the rental market particularly hot. Great conditions in first home buyer suburbs will ease but the rest of the city will continue to do well.”
Despite facing some challenges early in the pandemic, Ms Conisbee said Hobart had achieved one of the best results nationally, with its median house price exceeding Adelaide, Perth and Darwin, and the forecast showing it may hit a median similar to Brisbane sometime this year.
Canberra had one of its best years on record in 2020, with a similar trajectory tipped for 2021, and improved mining conditions have resulted in an overall stronger market in Darwin and “like Perth, rental conditions are particularly good”, Ms Conisbee said.