Grays Property Anatomy - 15 Jan 2021
Adrian Kelly, Bronte Manuel, Chris Gray
Welcome to the first episode of Gray’s Property Anatomy for 2021, with me, Chris Gray.
Well, it’s the start of another year and it’s predicted to be a great year for property! And by a great year, I mean it’s predicted to rise in value by a significant amount, in most parts of Australia. SQM Research recently reported that on average, we could be seeing about 5-9% increases this year, depending on what happens with COVID and how we react to it. Whilst we aren’t over COVID yet and we did have some outbreaks over the holidays, we’re certainly in a better position than many other places around the world.
Now, just remember that that’s an average and not all property is the same and so while some properties might go up 5-9%, some markets could rise by 0-10% and others by 10-20%. I believe there are a lot of cash buyers that have taken advantage of the temporary downturn over the last 12 months and these are long term holders of property, not speculators. So they’re people that are going to stay in the market for quite a while.
If you’ve already bought property then you should be pretty happy this time next year because hopefully you’re going to benefit from the increased equity in your home or investment property and further reduce the risk of you ever selling for a loss. It will help you build your nest egg for the future and give you some security even if the employment market has some further bumps to encounter.
For those of you who are yet to buy, then I think you need to get your skates on because when the market does move, it typically gets stronger and stronger and therefore harder and harder to buy, due to the increased competition. The property market will generally move faster than you can save but please don’t use that as an excuse to sit on the fence.
The government still has a number of grants available for first home buyers and those looking to build a property so certainly, take advantage of those as they can reduce the time it will take you to enter the market but make sure they make economic sense though as there’s no point saving $20,000 in stamp duty if you end up buying in an area you don’t want to live in, isn’t going to grow by that much and is potentially over-priced by $50,000 due to the artificial and temporary demand.
When the market rises quickly, panic often sets in, as does the fear of missing out. At auction, many buyers will bid based on what the bank will lend them and not what the property is worth. So technically, that could be seen as an overpayment but when the next property sells for even higher than that, that price them becomes the new fair market comparable, so you’re forever chasing your tail!
If you do already own property and are keen to buy more, this could be a good time to refinance by pulling out your available equity and keep repeating. We’re still not over the credit crunch and the Royal Banking Commission because lenders are still concentrating very much on your serviceability and ensuring you can afford to repay a loan. However, things have been easing over the last 12 months and there is talk that it will move to more of a buyer beware market rather than a lender’s responsibility but I still wouldn’t wait for things to change though. If you can borrow now, then my suggestion is buy now.
Call your agent and don’t wait for them to call you. Good properties always sell well even in a tough, medium or demanding market. Your ability to buy the best properties that tick all the boxes comes down to the relationships you have with the local agents so take the lead and make sure they always think of you first, when they list that perfect property.
I know, as a buyers agent for about the last 20 years, our success in getting many properties off-market or pre-auction is partly down to our knowledge but also the decades of relationships we’ve built up with many of the agents and the trust we build.
Extraordinary on many levels, I think we're all glad to see the back of 2020 and hoping for a healthier and less restricted 2021. In the property market, it seems the various government stimulus packages are having the desired effect, prices have held ground with strong demand and 2021 looks to be promising.
Joining us tonight to reflect on the year that was and sharing his outlook for the year ahead is Adrian Kelly, from VIEW Real Estate and newly re-elected President of the Real Estate Institute of Australia, based in Tasmania.
And finally, one state we didn’t check in on in 2020 was South Australia. Relatively unscathed by the COVID craziness of 2020 (that one hiccup aside) their market seems to be on track for growth of 10% in 2021, depending on which commentator you listen to!
To tell us more about what’s happening on the ground in Australia’s Festival State
15 January, 2021
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