What will the property market look like in 2021
When the global pandemic hit Australia, many economists predicted a steep downturn in house prices. What they didn’t predict was that despite the pandemic and the government Jobkeeper handouts resulting in more debt, the Australian housing market defied the odds and arrived in January 2021 with a 0.8 percent increase from November and a 3.1 percent increase for the year. Now, people are wondering what will the property market look like in 2021.
For first home buyers, 2020 proved positive with the government’s HomeBuilder grant appealing to many affordable locations and builders. Quite the contrast to what housing experts would consider a massive negative impact on a first home buyer’s ability to enter the market. However, it demonstrated the importance of savings and financial security. Click here to get some top tips on how to start 2021 on the right financial foot!
How did the property market survive?
Behind all those forecasts of plummeting prices was the fear that thousands of Australians would lose their jobs and wind up defaulting on their mortgages. While unemployment did go up, mortgage deferrals have helped keep distressed sales to a minimum.
2020 also saw a historical occurrence when the RBA reduced their cash rate not once, but three times, to arrive at a rate of 0.10%. History tells us that a low cash rate goes hand in hand with increased property prices and this has definitely contributed to what we’ve seen in the 2020 housing market.
Finally, the inability to travel and holiday in 2020 has caused many people to redirect their money towards saving for a house, and ultimately boosting their financial position.
What is expected for 2021
With 2021 underway, it’s predicted that we will continue to see serious growth in the housing market. NAB has forecasted a 5 percent national increase to the housing market for 2021 and a 6 percent for 2022. With consumer spending stronger than expected, people remain comfortable with the idea of purchasing their first home this year.
For first home buyers, the extension of the HomeBuilder grant, with contracts now to be signed by March 31st, provides more opportunity to enter the housing market. The continuation of the First Home Owners Grant and the First Home Loan Deposit Scheme also provide extra entryways into home buying. With the cash rate at an all time low, we can expect to see a perpetuation of increased house prices, so if we learned anything from 2020, it’s to take advantage of what’s being offered our way in terms of low interest rates and government grants!