What is Predicted for the Property Market in 2021?

2020 certainly threw Victoria’s capital city some curveballs, but amazingly, the housing market remains resilient and is set to reach new heights for 2021. 

Melbourne has been put through its paces over the last 12 months, but despite lockdowns, economic recession, and a rise in unemployment, so far, the property market has withstood the disruption of the pandemic and is continuing to grow steadily. Even the 5-day lockdown at the start of February hasn’t slowed the momentum – nationally recognized as one of Australia’s most liveable cities, Melbourne’s demand for property is on an upward spiral.

So, What’s the Forecast for 2021?

In short, the prediction for the property market this year is very positive.  After finishing last year with a growing upward trend, January saw housing values continue to rise as buyers line up.  The demand for suburban properties and houses on the city fringes continues to grow, and it appears that this trend is set to continue throughout 2021.

Where’s the Action Happening?

With newfound work-from-home arrangements, people are deciding to move to the outer metro fringe and even regional areas.  Regional property prices have risen at twice the pace of those in the inner cities – during January, regional Victorian home prices rose by an amazing 1.6% as compared to 0.4% increase in Melbourne metro.

In the past, Melbourne has been a city that heals from the inside, but times are changing fast: it’s the suburbia’s time to shine as the outer areas are becoming more popular with buyers.

You might find yourself asking ‘what’s driving this shift in consumer preferences?’  It seems that there are a lot of people, especially families, who just want to escape the inner city and get better value for money.  Areas with lower population density are becoming more attractive and with interest rates low and government stimulus packages at record highs, lifestyle properties have become an affordable option for a greater range of buyers.  For some people, the chance to be closer to costal/regional holiday destinations is the carrot – the outer suburbs have everything needed to maintain their busy, contemporary lifestyles, but the homes offer better value for money and that proximity to nature that isn’t available to inner city dwellers.

Increasing participation from first home buyers is also pushing the market upwards.   

Houses or Units?

During 2020, changing living preferences saw the demand for detached houses continue to increase, and it seems that this key trend is likely to remain strong in 2021. Having said that, for entry-level purchasers and investors, units are still proving to have their place.

The languishing demand for inner city units and apartments is largely due to this market’s reliance on overseas students and migrant workers.  With the demand from this sector largely gone, these properties in the inner city have been underperforming.  Watch this space: 2021 may see investor activity shifting towards the detached housing market in preference to units.

Following the seasonal shutdowns, both buyers and sellers are now in active in the Melbourne property market.  There’s a feverish amount of activity happening in the auction sector: the last week in January saw 388 auctions held across the city, and 90% of properties taken to auction in the last few weeks have sold!  Even grand final day (a day typically reserved by Melbournians for celebration) saw plenty of real estate action!

The positivity is contagious: with such strong auction results recently, vendors will be enticed to list properties and the market is likely to continue to remain hot throughout 2021.

Are There Any Risks to the Housing Market for 2021?

The past 12 months has taught us to roll with the punches, and with respect to the property market, most analysts see a bright future for 2021 in Melbourne.  The most significant risk of course is further outbreaks of the virus and additional lockdowns, however, with the imminent rollout of the Covid-19 vaccine, consumer confidence is likely to be strengthened even further.

A trusted property professional you can turn to for genuine advice is going to be your best ally – don’t hesitate to get in touch with the Love & Co team to chat all things property and the current market should you need any guidance.