- The housing market has shifted from a buyer's market to a seller's market
- Sustained low interest rates and the fear of missing out have been main contributors
- The seachange and treechange trends have also played their part
The housing market is experiencing a shift from the buyer’s market to a seller’s market, the main drivers being low interest rates and the fear of missing out (‘FOMO’).
Australians are feeling confident in the continuation of ultra-low interest rates, predicted by many commentators – and the Reserve Bank of Australia itself – to be in place for the next two years.
Together with the current low availability of properties in many popular areas, this has been borne out by relatively high auction clearance rates. Clearance rates are expected to remain above 70% across the country, similar to pre-pandemic levels.
According to a Brisbane-based buyers agent, reports of tight stock are coming from everywhere.
“It’s not uncommon to see lower stock levels over the summer break, but this year has been something else,” said BuyersBuyers.com.au co-founder Pete Wargent.
“Even as new listings have begun to pick up, supply is being comfortably outstripped by demand and the market overall is very tight.”
“In most parts of the country, open homes are busy as confidence returns, and strong sales results are being reported in short order.”
So-called ‘lifestyle areas’ experienced strong demand even before COVID-19 hit. With the seachange and treechange trends, demand is now even stronger.
Wargent reports that many of those who are able to work remotely and hold stable corporate positions are taking advantage of great buying opportunities in NSW, Victoria, and south-east Queensland.
This ability to work remotely and the shift to regional areas has aided in sustaining housing affordability, as the pressure in capital cities is alleviated.
Particular hotspots for ‘lifestyle areas’ are listed as the Sunshine Coast, the Gold Coast, Byron Bay, the Central Coast, North Avoca, Terrigal, and Wamberal, Hunter Valley, Wollongong, and the NSW South Coast, the Mornington Peninsula, Geelong, and Ballarat.
For Sydney and Melbourne, projected capital growth for 2021 is in the range of 8 to 12%.
Wargent has different predictions for South Australia, Western Australia, and the Northern Territory than for the eastern states. These areas of lower population growth and softer job markets are also experiencing strong capital growth for houses. This is less sustainable over the long term.
With sustained low central interest rates, home loan rates also dropped to record lows. The knock-on effect has been increased home finance levels which Wargent predicts to continue into 2021.