Property experts are forecasting 2021 to be a boon year for Australian house prices as the market surges through a temporary “pause” created by COVID-19.New analysis by Propertyology’s head of research Simon Pressley predicts that five out of eight Australian capital cities will produce double-digit house price growth in the coming 12 months.What’s more, Mr Pressley believes that next year heralds “the best set” of real estate conditions seen in almost 20 years.
“All things being equal, Australia has just commenced an era of accelerated rates of home ownership and wealth creation, in a manner not seen since the five years ending 2005,” Mr Pressley said.Among these conditions, Mr Pressley explains, are record-low interest rates, improved availability of credit and low housing supply.He said much of the negative impacts of COVID-19, including predictions of sudden property price shock, will be washed away in 2021 as potential buyers who have hoarded deposits through the worst of the pandemic prepare to spend.
Mr Pressley said forecasts based off low population growth – due to international borders being shut – do not produce accurate estimates of future property price performance.”To be completely frank, banks and economists have never had an intimate understanding of the mechanics of property markets. They proved that again with enormous doomsday forecasts when the germ arrived on Australian shores,” Mr Pressley said.”Contrary to the opinions of a cast of thousands, population growth has always played a relatively small role in property price growth.”The long list of factors which influence demand for housing 100 per cent of Australia’s current population have significantly greater influence than the national population not growing by an extra 1 per cent due to international border closures.”
A strong driver of demand is supply, which Mr Pressley says is low – which will in turn drive prices up as more buyers are competing for the same properties.”Property is shelter, an essential commodity, not an ‘index’ on a bean-counter’s computer screen,” Mr Pressley said.”It is a fact that Australia had a national shortage of shelter available for sale and for rent immediately before COVID-19.”A germ is not capable of creating more shelter.”