Introduction
We are currently experiencing one of the broadest property booms the nation has ever seen. It feels as though each month, both Metropolitan and Regional locations are achieving record prices.
While this may be good news for owner-occupiers and investors already in the market, the rapidly rising prices are impacting affordability and locking many out of the market.
But is this price growth trajectory likely to continue, or are there already signs the boom is running out of steam? Let’s delve into this a little deeper.
What is currently happening?
Australia’s property market is rising in almost every location, according to one of the biggest real estate valuation firms. The monthly Herron Todd White (HTW) property report considers all areas of Australia across houses, units and retail locations, and has found that almost every region of the residential market is now experiencing a price growth spurt.
Historically, strong markets used to be centred around capital cities and metropolitan areas. Regional areas performed well, if specific industries were nearby.
However, these strong current market conditions are being experienced almost everywhere. Low interest rates, increased household savings across some buyer groups, a desire to upgrade, and potentially the fear of missing out (FOMO), are all contributing factors to these market conditions.
The impact of COVID-19 has been significant with many Australians feeling isolated by not seeing loved ones for many months. This has resulted in a number of buyers changing their outlook towards family, home location and work.
These buyers are now looking to be closer to family and are seeking lifestyle, over congested suburban environments. These buyers are now focused on finding a quality property, within locations that emphasise liveability.
Our agency alone has seen a significant increase in buyer inquiry over the past 6 months, both from local and interstate buyers.
Buyers are now less constrained with where they are looking for property and investment opportunities. Many buyers are quite happy working from home, so travel time is no longer a consideration.
However, according to Domain, there are eight areas across Australia where median house prices fell in the past year. It was mostly country areas, where buyers could not envision lifestyle opportunities, where house prices had declined. The Queensland Outback region, which includes Cunnamulla, Mount Isa and Weipa, topped the list (see figure below).
Source: Domain, June Quarter.
Always take a long-term approach and remember the fundamentals.
In order to succeed in property, buyers need to understand the key fundamentals and that real estate is not a short-term game. Buyers need to thoroughly research their desired location, and be comfortable with holding property for 10-20+ years in order to see a strong gain.
As we continue through the COVID-19 pandemic, it’s important to remember what property types, and locations, buyers will find desirable and attractive long-term.
Buyers will continue to seek properties that emphasise liveability and lifestyle – and at the moment, are not prepared to wait out the pandemic to secure their next home.
Buyers are unable to travel freely and cannot splurge on lavish holidays; instead, they are seeking lifestyle opportunities and upgraded homes they can enjoy now. Buyers’ priorities have changed significantly, and some buyers will be willing and prepared to pay more for properties that have additional space and highlight elements of “pandemic appeal”.
Proximity to amenities such as parks, shopping centres, schools, road transport, and jobs will continue to be important to many buyers. Locations that emphasise the ‘best of both’ worlds – where buyers can enjoy lifestyle amenities, yet still practically get into a capital city when required – will continue to do well long-term.
Always seek advice from a trusted professional.
Investing in real estate is exciting and can significantly transform your life. Now is a great time to get started on your property journey, or continue climbing the property ladder, as interest rates are at an all-time low.
To learn more about the benefits of real estate investing and what prices may do long-term, contact us at One Agency. With One Agency being one of Mildura’s most trusted real estate agencies, we are well placed to provide you with our view of the current market based on our local experience. We’ll thoroughly guide you through the process and help you take advantage of this opportune time in the market.
