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EXPERT INSIGHT

This year will deliver a nationwide property boom. I have few doubts about that and my confidence is strengthened by the number of commentators who are now forecasting a year of strong growth. It’s not often we see all kinds of analysts agreeing about what will happen with property prices.

It’s even rarer for economists to publish optimistic predictions. Even the major bank economists are bullish about real estate this year. Pretty much everyone with a public view about the direction of real estate markets – economists, media columnists, various attention-seekers and genuine real estate analysts – have been unanimous in tipping substantial price growth in 2021.

Perhaps the only point of difference among the pundits is how much. But many of them are expecting double-digit increases in median prices. It’s not so long ago that major media, fueled by pessimistic economists, was strident in declaring an impending collapse in property values. The housing market proved the naysayers wrong: 2020 was the best possible advertisement for residential property as an asset class, as most markets delivered growth in defiance of the pandemic.

The latest figures from CoreLogic suggest that all capital cities except Melbourne had price growth in 2020, with Canberra, Adelaide, Darwin and Hobart all rising between 6% and 9%. Sydney (up 4%), Brisbane (4.6%) and Perth (2%) all recorded moderate growth in their house prices, in a year when most of the nation’s cities defied the pandemic and its negative economic impacts. That’s a commendable performance but the capital cities were out-done by many of the regional markets.

house prices rose 12% in Regional Tasmania (compared to 7.7% in Hobart), 8.8% in Regional NSW (compared to 4% in Sydney), 7.8% in Regional South Australia (compared to 6% in Adelaide), 7.3% in Regional Queensland (compared to 4.6% in Brisbane) and 5.5% in Regional Victoria (compared to a 2% decline in Melbourne). Unit markets also did well in the regions, with price increases headed by South Australia (up 11.7%) and Tasmania (up 10.5%). NSW, Victoria and Queensland all recorded unit price rises between 5.5% and 6.5% in the regional areas.

The only regional market to record price decline was Western Australia, which dropped both for houses and for units. These figures show that the momentum for a national property boom is already building and indeed that some markets are already surging strongly. The infrastructure-led economic recovery planned by federal and state government will add to that impetus. Few things generate momentum in residential property markets like big spending on new infrastructure and politicians have shown they are willing to put their budgets into debt to fast-track projects that are shovel-ready or close to it. Another big factor likely to put upward pressure on prices is the level of vacancy rates around Australia.

Outside of the inner-city areas, vacancies are very low in most locations and in some they are so low it represents a rental market crisis. The upward pressure on rentals is considerable, particularly when prospective tenants are offering more than the asking price to secure properties ahead of the competition.

A further factor to consider is that the growth achieved in 2020 occurred without much involvement from investors. First-home buyers and other owner-occupiers have dominated – but there are signs this is changing. I expect investors – who, as a cohort, tend to react to market trends rather than lead them – to be a lot more prominent this year and that will further turbocharge property prices. Outside of those inner-city areas, it’s a great time to be a landlord.

It's no longer an unknown secret that land in Melbourne is becoming scarce and in turn more and more expensive. A booming population, an undersupply of housing in our state, council red tape and a decrease in building approvals combine and add pressure to an overall increase in the long term to higher land costs. This is great news for those of you who have been sitting pretty on land in the Melbourne suburbs that has only appreciated over the years you have owned it.

The days of buying a house with a large backyard are behind most first-time and second-time home buyers who are trending towards townhouses closer to amenities as a result of no longer being able to afford that old dream of a house with a big backyard close to Melbourne CBD. However, for those who have land already this provides a real opportunity to capitalise on your land and secure your financial future.

You do not need to take my word for it, director of AD Partners and creator of Building lifestyle – Your own virtual CFO and author of Build It and The Money Will Come, Mr Tony Dimitriadis tells, "It would be surprising if you haven't noticed this by simply driving in your local area or even knowing of someone who has actually done it. These projects aren't just the work of big-time property developers. It's just a matter of seeing the potential, understanding the process and getting the right advice."

There has been no better time to capitalise on your back or side yard and build a townhouse or two that you can sell at a profit or rent out to help service a life you so thoroughly deserve. Whilst most people will be overwhelmed with sub-diving their land and watching a construction commence on their once backyard for many people this is a great way to reduce your gardening and put some real money in the bank to enjoy.

There are of course many steps involved in such an undertaking including concept designs, town planning approval, building permits, selecting the right builder among other aspects. However, it need not to be, we at Quist Property Group are experts in exactly this type of project. We have a dedicated team focused on achieving a sustainable development which will provide real financial certainty whilst ensuring your needs and requirements are considered and addressed. Working with council and not against council we have a proven track record of getting these sorts of ideas and projects out of the ground and into reality. We can hold your hand throughout the entire process, explaining all the required steps with the mission of capitalising on your land and securing the financial certainty of your dreams.

Give Michelle a call to discuss your options.