Australian property: nationwide boom forecast for 2021

Australia’s 5 major capital cities recorded growth in November, December and January, with 2021 set to continue this positive trajectory in capital growth.

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.

This year will deliver a nationwide property boom
— Terry Ryder

What is driving these growth predictions for the Australian property market?

  • 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.”

Australia economic growth property outlook

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.

Australian property home loans

Demand pushing vacancy rates down

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.


Positive Capital Growth Forecasts from the major banks

The big banks rarely forecast growth for all the major city markets at the same time, but latest figures show that in 2021, this is indeed the case.

“As our CEO, Joseph Chou mentioned in his message last week, it is quite rare to see such uniform positive sentiment, which is really exciting for anyone who is already holding assets in these markets, or for those looking to invest before the predicted ‘boom’ begins in full,” said Ironfish Head of Property William Mitchell.

Ironfish Research & Property Selection

Ironfish has its own research and property division which monitors the national markets and looks for great up and coming locations and great properties in those locations for investors.

In 2021, the Ironfish Property team has identified some great investment opportunities across all the key markets in Australia.

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