AUGUST PROPERTY REPORT
We’ve just crossed the half year mark for 2021 and property values across the district have achieved exceptional prices so far this year alongside our capital cities rising 12.4%. Despite Covid concerns, there’s more growth to come for the remainder of the year.
The global pandemic has forced Australians to rethink every aspect of their lives: Are they in the right job? The right suburb? The right housing? With the pandemic fuelled work-from-home revolution, many city dwellers are not just contemplating the idea but actively seeking to move away from the busy inner-city suburbs and into quiet regional areas to gain that perfect work life balance. On top of this, another main factor fuelling the rampant price growth in the area is the fact that most first home buyers can no longer afford to compete with second home owners. The life they want to start compels them to broaden their property search.
At a time when supply is struggling to keep up with demand resulting in inflationary prices, buyers namely retirees, growing families and first home buyers are still out in full force. The regional market is experiencing such an enormous growth period with seemingly unlimited demand and lack of supply. Competition is fierce with multiple offers placed on properties, sometimes in a matter of days. And with a delay in the building industry due to a global timber shortage, buyers seeking properties now are moving on established homes while interest rates are at an all time low.
National household debt levels have more than doubled since 1990 to 2020 from 70% of the nation’s GDP to almost 185% of GDP. Changes to land tax and stamp duty have aided this exorbitant hike. Recent amendments to land tax have seen an increase in the minimum in the general land tax threshold from $250,000 to $300,000, as well as an extension of the land tax years where the land has not been used or occupied, and has not changed ownership to two years. The general land tax rate has also increased from 1.3% to 1.55% when the taxable value of landholdings are between $1.8m to $3m. Buyers are urged to consider the whole picture especially the potential economic consequences created by the ever-changing housing markets and its current prices.
So why is there such a housing shortage?
The property market is not just recovering from the global pandemic, it’s being driven by the surge of Australian’s upgrading their demands for larger properties in regional locations across the country. With the Melbourne Metro house price averaging around $1mil, there is an equal number of Vendors considering their options and where they envisage their lives over the next few years. There seems to be a trend in regional clients moving interstate, but the housing crisis has meant sellers are still in the same position when they come to buy.
So, when will the boom end?
It is believed that the property demand will continue to rise unless a major unpredictable circuit breaker occurs such as higher interest rates or government intervention. There are predictions of looming interest rate rises as early as November 2022 which will be heavily influenced by inflation and wage growth. With the nations labour force demand increasing job security, wage growth is on track to hit 3% per annum.
This is aligned with a strong property market for the next 12 months and a declining unemployment rate predicted to reach 4.5% by the end of 2021.
We are strapping in to continue servicing the relocation of our clients over the coming month and look forward to seeing what the market has in store for us for the remainder of the winter period.