Property Market set for "Boom Year"

Property Market set for "Boom Year"

Property Market set for "Boom Year"

Australia’s property market is set for a big year with price growth to accelerate sharply, according to a leading economist.

Releasing the REA Insights Property Outlook Report 2021, chief economist Nerida Conisbee said 2021 is looking like a bumper year for price growth as positive momentum continues. “Property’s back and it will be a boom year in 2021,” Ms Conisbee said.

Ms Conisbee predicted there will be a sharp acceleration in pricing driven by record savings rates and cheap and easy finance. “The Australian economy is no longer in recession, a vaccine is now available, interest rates are at record lows and access to finance continues to ease,” Ms Conisbee said.

“There has been an incredible lift in the household savings rate and there’s also been an incredible lift in household wealth. All of those factors are combining for a really massive year.”

Ms Conisbee noted that conditions started to look quite strong after November, particularly as Victoria came out of its extended lockdown. There were fears that prices could plummet during the coronavirus pandemic and recession, but despite some initial periods of price decline in some markets, house and unit prices mostly rose across Australia during 2020.

A number of economists have forecast strong growth in prices over the next two years. Westpac economists on Monday said the housing market is moving into a sustained boom, predicting dwelling prices will rise by 20% in total over 2021 and 2022. 

Strength in regional markets to continue

Ms Conisbee predicted regional property markets will continue to outperform capital cities, as the health crisis accelerates interest in regional living amid demand for more space and changes in work patterns. There has been strong demand for beachside and lifestyle locations in regional Australia, while the inability to travel overseas due to closed international borders is also driving more people to buy a holiday home.

Ms Conisbee said a lifestyle change was one factor driving the record exodus of people from capital cities to regional areas, although the mining sector’s bumper year was a significant driver particularly in Western Australia.  “Interest in regional Australia doesn’t seem to be waning,” Ms Conisbee said. “We continue to see a trend for regional property in search activity on, and price growth has been far higher in regional areas compared to capital cities,” she said.

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