The 2020 property market was the most surprising I have experienced in my career.
Property commentators and financial institutions predicted price corrections mostly between 10-30%. This was not surprising given the pandemic and widespread joblessness. The amazing part was despite a climate of catastrophic joblessness and unrelenting news headlines from around the globe and in our own backyard warning Australians that the worst is yet to come, it was not enough to keep Aussie’s away from buying real estate, and in addition to this Australian house prices as a whole rose 3% in 2020 with some city’s currently in the midst of a property boom. This is nothing short of amazing. Knowing what to make of this, and using this information as a basis to learn from and make future decisions however can be frustrating. Bitcoin hitting a high of $42,000USD on the 4th of January didn’t do much in the way of supporting a Covid crash, it did however give hints as to where people are putting money and show us that there is still a large appetite for investing outside of property.
Interest rates, employment, and migration amongst other key triggers explain supply and demand, however in this climate we cannot simply lend the state of the market to interest rates or stimulus alone. If I were to try and draw one simple conclusion from 2020 it would be that Australian’s value land ownership in their hearts and hold this value highly. I believe people connect property to family and owning property gives Australian people connection to their families and communities. Most Australians will grow up with an initial goal of owning a house, and most people will think about property when the word investment is mentioned. In turbulent times people feel safest holding equity in property especially when interest rates are so low, and the stock market is volatile.
Key take-away points and other notes;
- Experts predicted drops between 15-30%
- National property values rose by 3% in 2020
- The total value of new loan commitments has reached all-time highs
- The overwhelming majority of purchasers are owner-occupied
- Investors are beginning to re-enter the market in 2021
- House sales values in South Sydney are past the 2017 peak
- Apartment sales values are steady and have not risen
- Off-the-plan sales have bounced back but no-where close to 2016
- Bitcoin reached a high of USD42k earlier this month
- South-East QLD and Gold Coast in particular is experiencing a ‘frenzy’
- Perth has been the centre of attention with its best predictions since the mining boom
- Highest local demand is buyers up-sizing from units and townhouses
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Billy Couldwell
