Stronger Economic Growth to Drive 2021 Property Market
- DECEMBER SYDNEY MEDIAN DWELLING VALUE INCREASES 0.7% IN DECEMBER TO $871,749
- VALUES UP 1.3% ON QUARTER AND 2.7% ON YEAR FOR HEALTHY TOTAL RETURN OF 5.3%
- WELCOME REBOUND IN LEADING ECONOMIC INDICATORS AND NAB BUSINESS SURVEY
- HISTORICALLY-LOW INTEREST RATES AND EASIER BANK CREDIT FUELING HOUSING LOAN SURGE
(CoreLogic and REIA figures. RBA Charts)
Sydney’s real estate market welcomed in the New Year in fine style with a healthy 0.7% December increase in dwelling values. The Sydney median property value leads the nation at $871,749, well off the market lows of early 2019. For the year, Sydney property values increased 2.7%, yielding a total return of 5.3%. 2021 promises further strengthening in housing values as the full effects of the RBA’s record low interest rates filter through all sectors of the economy. The nationwide increases in dwelling values can be attributed to a combination of record low interest rates with relaxed bank lending policies, higher domestic savings ratios, improved employment and a scarcity of freestanding houses. These are all long-term trends which should continue well into the New Year.
ECONOMIC ROADMAP FOR CONTINUED STRENGTH IN THE SYDNEY HOUSING MARKET
In the final three months of 2020, Australia recorded its strongest quarterly GDP growth in 30 years.
Both the unemployment rate and underemployment rate ticked down in 2020 and will continue to drop as the economy recovers in the New Year. The drop in consumption has meant a surge in disposable income and a savings ratio approaching 20%. Historically, increases in disposable income are positively correlated to increases in housing prices.
The problem for these savers is that the banks are giving them virtually nothing on these deposits. Not willing to accept a near-negative cash rate and real negative returns on their savings (after inflation and taxes), Australians are rushing back into the property market. Fueled by record-low interest rates, housing loan commitments have exploded. As can be seen in the RBA chart below, these housing loans are mainly for owner-occupier loans, but investor loans are also now ticking up.
Monthly private residential building approvals surged over 30% in Q4 2020 to +160,000. This translates directly into more sales and more turnover for Sydney real estate professionals. Private residential building approvals are one the best leading indicators for longer-term strength in the housing market and this important indicator has turned up.
Sydney’s real estate professionals should expect continued high clearance rates at auctions as informed buyers with pre-approved mortgage finance bid up to secure their dream homes at record low interest rates.
LET V-MARK DESIGN HELP YOUR LISTING STAND OUT FROM THE COMPETITION
There’s nothing more thrilling than watching a spirited bidding war break out at a highly-anticipated property auction, creating a standout outcome for client and agent alike.
The essential first step to achieving such success at auction is a well-designed and informative marketing campaign that gives buyers the confidence to up their bids.
The importance of great photography and clear copywriting in this process cannot be overemphasized.
V-Mark Design represents the cutting edge of 21st-century real estate marketing in Sydney and Australia wide. We have the skills, experience and imagination to present your listing at its best for its target market across all social and media platforms.
Call our friendly team to discuss your property marketing needs today.
To all our clients old and new, we wish all of you continued success throughout 2021.