Brisbane, Adelaide and Perth are tipped to experience the strongest price growth this year, as 19 per cent of existing investors explore new purchases, an expert has said.
CoreLogic Research director Tim Lawless is forecasting a property price boost of between 7 per cent and 10 per cent in 2021, with the smaller capital cities tipped to benefit the most.
Brisbane, Adelaide and are expected to post strong growth, while Sydney and Melbourne are set to trail behind, with buyers predicted to shun inner-city apartments and focus their attention on the suburban housing market instead.
“If the COVID pandemic has shown us anything, it is that property can be a safe investment, but you need to be careful about what type of property you invest in,” Mr Lawless said.
“We recommend investment in land because it appreciates in value. Of course, many investors need to build something on that land to help them pay down their loan, that’s why we recommend building a new house in areas of high population growth and with significant amenity and jobs nodes nearby.”
Acknowledging the current lack of listing, Mr Lawless believes this trend is set to continue to drive the property market within the next few months.
“While listings started to lift at the end of 2020, they are still 21 per cent lower than at the same time the previous year,” he said.
“I think it will remain subdued throughout January and maybe into February. My guess is demand will continue to outweigh supply and that will be one of the recipes for higher prices. Investors will become more active in 2021.”
His predictions are backed by a national survey done on behalf of Custodian, which found that 19 per cent of current investment property owners plan to increase their portfolio in 2021. Moreover, around 6 per cent of respondents said they could become new market entrants as they look to purchase their first investment property this year.
The survey also found that 22 per cent of investors had put off buying an investment property in 2020 because of the COVID crisis.
Going into 2021, investors are motivated by positive cash flow and growing capital gains, Mr Lawless said, which is why their attention is tipped to be on smaller cities.
Besides being more affordable than Sydney and Melbourne, cities like Adelaide and Brisbane had not experienced the downwards pressure from weakening rental markets that Melbourne and Sydney had.
“We will see buyer numbers remaining very high because of low interest rates and confidence, providing we continue to keep COVID under control.
“What we don’t know is how much stock will be added to market. My guess is it will be not much different from second half of 2020,” Mr Lawless concluded.