Currently property buyers are heading back into our housing markets in droves, all keen to get a foothold as property values are surging in many regions. You can sense that there’s a level of FOMO (fear of missing out) starting to kick in among buyers. But they are finding limited stock, with seven of our eight capital cities having significantly less properties for sale than 12 months ago. Strong demand at a time of limited supply must lead to property price growth.
While we know there are still broad risks to the economy with JobKeeper set to finish at the end of March and wages growth still low, we still believe now is a good time to come to the market given the basic fundamentals are sound. Buyer demand has never been so strong and all the indicators continue to point to continued growth.
The rise in housing values is occurring against a backdrop of low advertised supply and rising buyer activity. Inventory levels started 2021 in a tight position. Melbourne and Perth were the only capital city markets to buck the trend, with new listings 20 per cent higher than a year ago in Melbourne and 2.2 per cent higher across Perth. Melbourne vendors may still be playing catch-up from the earlier lockdown period, while in Perth vendors seem to be relishing the best selling conditions seen in many years.
The rental market dynamic has changed substantially through COVID-19 but there are some early signs that weakness across the unit sector is starting to level out, if not turn around. Rental demand has transitioned towards detached and lower density housing markets since the pandemic, partly reflecting the disruption to rental demand from overseas migration, but also the stress of changed working conditions, caused by COVID-19 restrictions, in industry sectors that are traditionally more aligned with rental demand. Additionally, with more people working from home, demand for larger housing options has lifted.
At the moment, despite our expectation of a lift in new listing numbers, buyer demand is still outpacing new stock additions. Demand is expected to remain strongest from first-time buyers and upgraders, many of whom are spending money – on a house they might otherwise have used on overseas holidays.