The Agency has just released its Autumn 2021 Property Report, with CEO Matt Lahood pointing out the combined capital city dwelling values rose by 2.8 per cent in March, the fastest rate in 32 years.
Mr Lahood also said that although regional price growth outstripped the capital cities last year, at 6.9 per cent, this year capital cities had caught up.
“Research shows around one in five of Australia’s expats – some 400,000 – came back home during 2020,” Mr Lahood said.
“Of these, it seems a large percentage have been intent on buying property.
“While Sydney – and to some extent Melbourne – absorb many of these buyers, all capital cities and many regional markets are benefitting, too,” he added.
Mr Lahood noted that NSW areas such as Southern Highlands, Central Coast, and Wollongong, which are within “striking distance” of major metropolitan areas, have also made considerable gains.
He also noted that property owners wanting to downsize were capitalising on the currently market, particularly because house price growth was outpacing that of units.
According to The Agency’s report, the RBA “may need to rethink interest rates due to economic strength”.
The Agency recently expanded into the Queensland market, and the report said the Queensland capital had experienced its first property boom in some time over the past year.
“Early 2021 has proven to be a great time to launch our Brisbane office,” The Agency’s Queensland General Manager David Price said.
“From Brisbane’s inner city to its outskirts and from the Gold Coast to the Sunshine Coast, the market has exceeded our expectations for the first quarter of the year, with buyers returning and prices rising.”
Mr Price noted that the current boom started in the sub-$1 million, but houses in the $4-$5 million range were now selling very well.
“Buyers really need to do their research and compare recent sales to get an idea of the price,” Mr Price said.
“Clever buyers can see the value and how prices are rising.
“On the flip side, with sales prices consistently exceeding vendor expectations, sellers should consider going to auction.”
Mr Price said he anticipated continued levels of growth and inquiries in the Brisbane market
“The market has more time to run yet,” he said.
The Agency’s WA General Manager Stuart Cox said there has been a dramatic shift in the market back to 2006 and 2008 sales volumes.
He said the price bracket of $1 million to $1.5 million was particularly strong, as were sales in the 10km to 15km radius around Perth CBD.
“It’s a cliché, but for the first time in several years, buyers really need to put their best foot forward,” he said.
“If they don’t make a decent offer buyers are missing out, as the market is rising.
“Many clients are asking us if they should sell now, or wait? The answer really depends on why you’re selling.
“For example, if you’re selling to move up the ladder we’d advise doing so sooner, rather than waiting for prices to rise further.
“Sellers should be aware that pricing and demand is picking up.”
After experiencing the harshest lockdown in 2020, Melbourne has experienced a 4.9 per cent rebound in the first quarter of 2021.
The Agency’s Victorian General Manager and Head Auctioneer Peter Kakos said his advice to those considering a move is not to expend too much energy on trying to time the market.
“No one can say for certain what will happen next,” he said.
“When the pandemic first struck, there was a rush to sell as homeowners took the view that the market would crash once JobKeeper and other government assistance was wound back.
“People who exited the market at that point would have missed out on 10 per cent or more growth and could now find themselves in a desperate position trying to buy back in with less money than they’d otherwise have.”
Mr Kakos said stock levels in the city normally sat at around 50,000 listings but were currently closer to 38,000. He said huge buyer demand was outweighing availability, creating significant buyer depth.
Mr Lahood said it would be an understatement to say Sydney had experienced a property boom in early 2021.
He noted that Sydney dwelling values grew 2.8 per cent in March alone, and 3.6 per cent over the first quarter of 2021, with a median dwelling value of $895,933.
In regional NSW, prices rose by 2.2 per cent in March and 5.5 per cent per cent over the quarter.
“Consumer confidence is high right now, and FOMO is driving high clearance rates and prices,” Mr Lahood said.
He added that although stock levels were on the lower side, strong buyer demand had continued to drive up prices.
“This fear of missing out is driving buyers to bid ferociously at auctions and we’re receiving multiple offers on most properties, even when they’re sold by private treaty.”
Although demand for apartments has been more subdued due to declining rents, in March 2021, Sydney unit values rose for the first time in a year.
“The lower end of the market has been largely underpinned by first-home buyers,” Mr Lahood said.
“Elsewhere, we’re seeing demand from lifestyle buyers: those wanting to upsize to a larger home, downsizers looking to capitalise on rising house prices, and sea or tree changers looking to move out of the city to regional areas.”
He also said the influence of returning expats on the market was particularly noticeable in Sydney, with some buying sight unseen before their arrival.
Mr Lahood said he remained hopeful that new listings would bring less urgency to the market.
“More listings will cool off the market, but that’s not a bad thing, as sellers will be more confident they can find something else to buy,” he said.
He also said autumn was an ideal time for sellers to take advantage of the rising market.
Although buyers are facing tough competition and rising prices, he said there was also a risk in not making a move.
“Buyers should do their research, and be ready to act fast when the right property comes along.”
According to the report, the lack of foreign students and interstate migration has impacted rental markets, particularly in Sydney and Melbourne.
Additionally, the shift of short-term rentals to long-term has impacted some markets, with family homes and larger units in higher demand, and the regional rental market performing well as people try before they buy.
When it comes to finance, John Kolenda from Finsure said interest rates could rise faster than the Reserve Bank had previously forecast.
“Over 2020 the RBA cut the official cash rate to 0.1 per cent and then announced it was likely to stay there until 2024,” Mr Kolenda said.
“But based on current trends, we believe banks will begin raising their interest rates much sooner – even during the next 12 months – and that borrowers should factor this into their buying decisions.”