After such an unpredictable year caused largely by the COVID-19 outbreak, is there anything Australians can expect from real estate over the next 12 months?
The beginning of pandemic saw predictions of drastic falls up to 30 per cent, but over time, the Australian property market has proved its resilience, recording positive returns despite economic turbulence, thanks to government stimulus and record-low interest rates.
In November alone, CoreLogic found that dwelling values are up by 0.8 per cent, with most capital cities seeing an increase, and regional areas performing even more strongly. This follows a 2.1 per cent drop in Australian home values between April and September.
Indeed, the Australian property market has emerged as one of the strongest industries throughout COVID-19. The government has even declared Australia as officially “emerging from recession”.
While the outlook has been overwhelmingly positive, investors and home buyers would do well to be cautious in the coming year, according to Aron Akca, co-founder and director of sales and marketing for Instarent.
Despite the possibility of overall market improvement, risks remain across the industry, particularly as it tries to adjust to the ‘new normal’, according to him.
Mr Akca has shared five predictions for property in the coming year:
1. Depreciating values
Values may start to depreciate in certain areas as government stimuli are gradually pulled, Mr Akca said.
“Certain areas are going to feel a further pinch in depreciating values. Certain cities have ranked extremely high with deferred loans and rental freezing.”
“Most of these property investors have opted they are NOT ready to start re-servicing the full loan repayment. This could cause a flood in housing sales, where supply exceeds demand,” he highlighted.
2. RBA cash rate
Mr Akca also believes that the cash rate will see a further fall, at least to 0 per cent and a high probability of sub zero, especially if a COVID cure cannot be distributed.
“This will be a significant leveller for the property market should there be an influx of properties up for sale.”
The real estate agent market is also likely to undergo adjustments next year, the director considered, with outsourcing emerging as a strategy to lean out running costs and adapt to an evolving market.
According to Mr Akca: “Real estate agents have already started purchasing their leads off lead generation companies niche to their market.”
“Traditional methods rely on hiring a wave of new graduates, paying a low retainer and having them chasing leads. We see outsourcing becoming a future phenomenon.”
4. Technology adoption
Technology will also be one of the things that will most likely help the transition to new normal, whether for property owners or professionals.
“Whether it’s an advancement in real estate agents using technology to scale one’s workload, a property owner choosing to sell their own property to keep that percentage of sale to themselves or the route of self-management, technology is rapidly evolving to save costs and boost productivity.”
5. Shift in mentality
Finally, the strain that most people felt during the pandemic is likely to have shifted their mindsets about the relevance of the great Australian dream of owning a house.
According to Mr Akca: “The days of owning a property before it’s too late could well and truly be over.
“It worked for 30 years straight, but with a constant bear market and many landlord pain stories surfacing of rent freeze, the next generation’s mentality may not see buying property as such a high priority in early adulthood.”