Australian property: nationwide boom forecast for 2021

Prominent market commentator, Terry Ryder notes that his personal confidence in the markets is strengthened by the number of analysts and market commentators who are unanimous in their strong growth forecasts for the year.

• Covid-19 – Australia as the ‘safe haven’

Australia has been remarkably resilient with much lower impacts compared to other major economies of the world, putting us in an enviable position globally. With expats returning to Australia, and fewer people leaving Australia for other countries, this may drive demand.

“Following the horror of World War I and the subsequent Spanish flu epidemic, distant, “safe”, English-speaking Australia attracted 50,000 migrants a year to a nation one-fifth the size it is today. In the post-apocalyptic world of 1920s Europe, Australia was very much seen as the escape option.

“The Depression and World War II coalesced to create a two-decade world of pain for the British and southern Europeans who again saw Australia as a safe destination. Immigration levels topped 150,000 in the 50s when Australia was a third the size it is today.

“From an Australian perspective, the GFC triggered a three-year boom within the long boom that followed our last recession, in 1992.”

– Bernard Salt, Managing Director & Founder of The Demographics Group

• Employment market rebound

Australia has experienced a sharp v-shaped recovery for jobs and the employment market, with payroll jobs recovered to pre-Covid-19 levels.

• Economic growth

All states have positive economic growth forecasts for 2021. Westpac Chief Economist Bill Evans predicts: “With activity rebounding strongly in the second half of 2020 we expect the economy to be operating at around its pre-COVID level by the June quarter.”

Additionally, with record low interest rates expected to remain low till 2024 – according to Philip Lowe, RBA Governor – it is easier than ever to positively cashflow an investment property.

• Increase in home loan commitments

The total value of new loan commitments reached a record high in December 2020, showing more and more people entering the market – an indicator of markets starting to move.

Vacancy rates are a reliable indicator of where rental demand outstrips supply. Currently, Perth, Brisbane, Adelaide and the Gold Coast all have incredibly tight vacancy rates, indicating they are strong landlord markets, with rental growth anticipated in the 12 months ahead.

Sydney and Melbourne do currently have elevated vacancy rates, however with international migration set to return to our shores in late 2021 or 2022, it is expected vacancy will stabilise quickly, and then trend towards the tighter positions experienced in these markets prior to Covid-19. Today, many suburbs across these cities do have tight rental markets, and so investors need to monitor this closely and understand where the best rental markets are in their selected city.