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What to expect in 2021: Prices tipped to drop before rebounding strong

14 DEC 2020 • By Maja Garaca Djurdjevic • 9 min read • Hotspots

Modest property price growth is expected to close off this year, with a strong rebound predicted for next year, a national real estate agency has said.

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Nationally, Australia has already seen a 3.1 per cent increase in median house values compared with this time last year, helped by lower interest rates, substantial government stimulus and a bounce in confidence as the pandemic comes under control.

But, according to real estate agency Upside, 2021 is expected to kick off earlier than usual with strong volumes, on the back of a build-up in properties that didn’t hit the market this year, which could see prices momentarily drop as supply increases.

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“Consumer confidence is at record highs, coupled with historic low interest rates, stamp duty reforms (in NSW and Vic) and talk of vaccines hinting at a return to normal in the new year – 2021 looks set to be a very healthy year for the property market with house prices across the nation on the rise again,” said Upside Realty director of sales and operations James Kirkland.

According to a recent report by the agency, the biggest changes have been strong growth in regional areas, particularly within an hour or two from capital cities.

“COVID-19 has changed the way many people work and live. Traditionally, Australians have found themselves living in areas that didn’t necessarily have elements of their ideal lifestyle – but did provide convenience for work,” said Mr Kirkland.

“The pandemic opened up other options, and many may never return to a full-time centralised work week with a daily commute, as employers realise that technology can aid in making an alternative solution possible.”

According to Upside Realty’s 2021 market report, state by state, top growth suburbs are predicted to be: 

NSW

  • Bardwell Park: A relaxed pocket in the St George area that still offers a quick drive to the inner west, the Eastern suburbs, as well as the airport. It’s also in proximity to the new WestConnex, which means easy utilisation. A high demand market, median prices are slated to continue to rise throughout the year despite the effects of COVID-19 on the housing market, with house prices sitting at $1.16 milion at the start of the year, now sitting at $1.35 million.

  • Narrabeen: Highly appealing to young professionals looking for post-COVID work/life balance. The rental market is thriving (40 per cent tenant rate) which means ample opportunity for selling when the time is right. Units in Narrabeen have seen a 4.3 per cent quarterly increase, and 12.25 per cent year-on-year, and unlike other Sydney median unit prices, has seen its unit values climb almost back to its peak 2017 price and set to likely surpass this high ($925,000) by 2021.

  • Windsor: An hour and 15-minute train commute into the CBD may have been a far stretch pre-pandemic, but the onset of hybrid workplaces opens up the opportunity for big spaces at affordable prices. The median home value sits at about $687,000 and the replacement Windsor bridge was put in as of May, making the transition to outskirt life much easier. 

Outside of Sydney, regional growth areas are the Central West and Newcastle. 

Victoria

  • Melton: Melton presents a unique mix of urban and rural lifestyles while remaining a reasonable drive to the city, at 45km away. With easy access to Tullamarine, Calder, Western, Princes and Hume Freeways, the Toll-free Western freeway also connects commuters straight into the heart of Melbourne’s CBD. The median house price is at around $392,000 and median unit prices at $320,000 (and steadily trending up). 

  • Craigieburn: A family-friendly suburb in the city’s outer north, offering value for money with large affordable homes. Greenery abounds in the form of grasslands and golf courses, with ease of convenience in shopping centres (including the newly opened Craigieburn Junction last year). Across five years of sales, Craigieburn has seen a compound growth of 7.5 per cent for houses.

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  • Box Hill: One of Melbourne’s largest metro activity centres, with facilities such as the rail, tram and hospitals (with a strong populace of medical staff seeking to lease locally in apartment-style living). The suburb’s capital gain of 20.84 per cent for the past year is higher than average, and ranks it as one of the best-performing suburbs in Australia in terms of capital gains. 

Outside of Melbourne, regional growth areas are Geelong and Wodonga. 

Queensland

  • Toowong: A short drive or train trip to the CBD, with the University of Queensland nearby, Toowong presents as a great commercial hub and a growing popular residential neighbourhood. For houses in Toowong, the house median was $1,004,000 with a 12-month growth of 12.81 per cent.

  • Camp Hill: The fusion of metro living in a relaxed suburban setting, Camp Hill is located just 6km from Brisbane’s CBD. Situated in the middle of the catchment zone for several sought-after schools, families make up 75 per cent of the growing population here. Offering a median house price of $908,000 with a compound growth rate over the last five years of 4.1 per cent, you will find attractive properties that are reasonably priced.

  • Manly: Just a 30-minute train ride (or cruise in by ferry) for those days where you are needed in the office. It’s also home to the largest boat harbour facility in the southern hemisphere, with a pick of multimillion-dollar living options, in addition to modern apartments, lowset brick buildings and contemporary units. Manly has returned an average of 14.20 per cent per annum in house price rises over the last three years.

Outside of Brisbane, the biggest regional growth area is Tugun. 

ACT

  • Franklin: Home prices have been steadily growing ever since the Canberra Metro light rail came through the area last year. Serviced by three metro light rail stations with rapid access to the CBD, the airport and southern Canberra, there is no shortage of transportation options for those who still need to commute to the office. Gungahlin’s redevelopment saw the suburb record a jump of almost 7 per cent in two-bedroom unit prices over the last 12 months.

  • Coombs: Situated right on nature’s doorstep, but a short stone’s throw away from community facilities and Weston Creek centre, investors should also take heed in the knowledge that Coombs enjoyed a strong 9.3 per cent year-on-year increase in unit values to $530,000 this year. With limited stock coming to market in this area, home values are seen to continue to enjoy a steady growth over the next year.

  • Jerrabomberra: Performing strongly over the COVID interlude, the lack of supply in this area means a significant shift in price growth, particularly in established townhouses. With the city easily accessible via various Canberra region highways, the region finds itself populated with mostly professionals and families seeking peace and sanctity in lifestyle. With the median price for a house in Jerrabomberra being $822,000 and the advertised rent reaching $650, the gross rental yield for property investors calculates to be about 4.11 per cent.

SA

  • Millswood: With the median home price in Millswood sitting at $1,022,000, and the average rent at $660, property owners could potentially earn a 3.36 per cent increase in gross rental yield – and buyers are certainly intrigued: Realestate.com.au logged an average of 3,700 visits per property to Millswood compared with the average across South Australia of 1,200 visits per property.
  • Port Elliot: Another beneficiary of the COVID lifestyle change effect, this suburb enjoyed huge interest at the height of the pandemic back in June, and still continues to experience extremely high search volumes on realestate.com.au. It is located a 75-minute drive from the CBD but with a great selection from four tranquil beaches nearby. The popular Strand and North Terrace have boutique shopping on offer, and for everything else, Victor Harbour is a short drive away. In November, the median house price in Port Elliot sits at $487,000, having experienced a 9.8 per cent 12-month growth.
  • Mount Gambier: Median houses in the area sit at $269,000, and the suburb has received the highest level of enquiries in South Australia from both first home buyers and investors post-COVID (April-September 2020).

Tasmania

  • Sandy Bay: Enjoying an eclectic mix of high-powered professionals such as doctors, lawyers and business execs alongside artists and students, city-living at a relaxed pace is the standard at Sandy Bay. A very active shopping strip, Sandy Bay has enjoyed a stellar compound growth rate of 7 per cent for homes and 9.5 per cent for units in the last five years.
  • Launceston: An ethereal mix of the old and the new, Launceston is beginning to gain the recognition it deserves. Buyers are urged to get a foot in while they can to this region that offers the best of both worlds. Median property prices over the last year range from $487,000 for houses to $389,000 for units.
  • Blackman’s Bay: Just a 15-minute commute to Hobart, this suburb will tick the boxes of many who are looking to enjoy the newly minted work/life balance. It offers some of the best views of open ocean or the Tasman Peninsula cliffs, or even the mountainside, while remaining close to the beach during the warmer months, and all the while enjoying the best aspects of convenient suburban life.

WA

  • Karratha: Suburbs in Karratha are leading the price growth in Perth, recording a 61 per cent increase in sales activity QoQ in 2020. This significant rise is attributed to the commitments made by mining companies to keep workers in WA since the onset of COVID-19. Median dwelling values in Karratha also grew, seeing the largest increase of 8.1 per cent to $465,000 this year – but, according to Upside, bargains are still to be had for those seeking a sunny outlook filled with weekend activities such as camping and laying by the beach (just a short drive away).
  • Willagee: Willagee’s proximity to Freemantle and gentrified newer homes has improved its popularity amongst home buyers – with sales volumes picking up at an explosive pace (up 18.2 per cent at the start of this year). Willagee has a 33.85 per cent rental population, and is currently sitting at a 0.63 per cent vacancy rate. Median prices over the last year range from $552,000 for houses, to $282,000 for units, while units rent out for around $350/week with a rental yield of 6.5 per cent.
  • Yanchep: Yanchep saw the biggest spike in sales activity growth in October at a 133 per cent increase – with a large number of these due to land sales. Considering it is only a casual 45-minute drive from Perth, the median price in Yanchep in 2019 of $380,000 is arguably reasonable, but this is set to rise as more set their eyes towards the outer city limits.

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