Median house prices across all markets are poised for a 10 per cent increase in 2021, an economist has said.
With the market poised for a price growth of 10 per cent in 2021 alone, Dr Andrew Wilson, the chief economist at Archista, advised new market entrants to take a “scientific approach” to property buying.
Speaking on a recent episode of The Smart Property Investment Show, Dr Wilson explained that seeking out properties with higher yields should be the starting point for all first property buyers.
“Yield is a good guiding point for investors, looking for the higher yields.
“Seek out properties with higher yields. Typically, they are more affordable and have higher entry points,” Dr Wilson said.
He admitted to being bullish about the Brisbane market, where yields on apartments are hitting 6 per cent.
“That tells me that prices will rise,” Dr Wilson said.
Next, he advised to “look at the correlating factors”, such as the number of vacant rentals, the actual rental movements in recent periods and the vacancy rate.
“I think you can create a simple model then, in terms of opportunities, and then you just sift through and do some more on the ground homework, in terms of local economic performance.
“You need to take a scientific approach to this rather than just throw a dart at the dartboard,” Dr Wilson said.
Other factors to calculate into your “simple model”, Dr Wilson said, are days on market and the actual price of the property.
But finance shouldn’t be left by the wayside.
“Investors need to get the finance right, and that’s really been the struggle. Do your homework and get your finance right,” Dr Wilson noted.
According to recent data from My Housing Market, the number of national newly reported homes sales over the week ending 7 February surged by 17.2 per cent compared with the previous week’s total.
Meanwhile, national newly reported sales over 2021 soared 33.6 per cent on the year, with Sydney once again at the top of the ladder with growth of 46.9 per cent, followed by Melbourne, 32.7 per cent; Brisbane, 19.5 per cent; and Adelaide, up 0.5 per cent.
Mr Wilson predicted the growth trend will continue.
“The prospect of sharp increases in home sales activity over coming weeks will continue to place upward pressure on house prices, reflecting strong ongoing competition among buyers for available properties,” Dr Wilson said.