What a year 2020 has been. To describe it as challenging would be an understatement, yet Australians have pulled through with trademark resilience.

The Australian property market has defied the odds and weathered the storms of 2020 with incredible strength, but some potential home buyers are still wondering: is it a good time to buy real estate?

All signs point to 2021 being a year of positive growth for both the economy and the property market. There is widespread optimism the economy is now in recovery mode, which gives home buyers renewed confidence in the Australian housing market.

Having withstood the year that was and looking to a brighter year ahead, there has never been a better time to build the home of your dreams.

The figures

Latest unemployment data from the Australian Bureau of Statistics show 6.8 per cent of the Australian population is jobless, the lowest level since April, down from 7.5 per cent in July.

In further promising news, the number of loan deferrals by the seven largest banks fell sharply towards the end of the year. Figures from the Australian Banking Association show deferred home loans dropped to 145,250 in November, down 67 per cent from June.

The data shows the downturn brought on by coronavirus was not as severe as some first predicted and according to the Real Estate Institute of Australia, the steeper than expected fall in loan deferrals should give consumers increasing confidence to buy and sell.

Amid the peak of the pandemic, house prices dropped 2 per cent across Australia’s capital cities to a median of $804,602. Once again, this defies earlier catastrophic forecasts. November data released by CoreLogic shows prices grew in every Australian capital city rising by 0.8 per cent nationally.

Many economists attributed the minor price correction to the positive impacts of government stimulus packages including JobKeeper, JobSeeker and the $25,000 HomeBuilder grant.

The grant is credited with creating strong figures in the detached housing market with the Housing Industry Association’s New Home Sale report showing new home sales were 41.1 per cent higher for the three months to November when compared with the same time last year.

The increase in new home sales is expected to push a flurry of construction work well into 2021.

The lowering of interest rates has also been a big motivator for home buyers and those considering investment property. The Reserve Bank of Australia cut rates three times in 2020, including a reduction in November to a record low of 0.1 per cent.

Rates are not expected to increase for at least three years and this is a major boon for home buyers weighing up their decision to invest in a new home. It increases housing affordability for a range of people including first home buyers, those who have been longing to upgrade and investors.

Queensland’s property market

Queensland’s economic recovery is expected to be twice as strong as that of the rest of Australia, according to the Queensland State Government’s COVID-19 Fiscal and Economic Review.

The property market in Queensland has seen annual house price growth of 4.4 percent in Brisbane and 3.2 per cent in regional Queensland. The Real Estate Institute of Queensland reported that Brisbane’s median house price rose 1.4 per cent in the September quarter to $720,000. The annual figures showed the median house price rising 4.4 per cent to $710,000.

New home sales in Queensland increased 34 per cent in the three months to November when compared to the same period in 2019, according to the Housing Industry of Australia’s New Homes Sales Report.

Perth’s property market

The property market in Perth is performing increasingly well. House prices were lifting in the latter half of 2019 and swinging upwards until COVID hit.

Prices only stalled briefly before recovering to post a 0.5 per cent upturn median price in the September quarter, according to the Domain House Report. Annually, house prices in Perth rose by 2.4 per cent to $534,336.

There was a range of incentives that helped drive Perth’s property market including the $20,000 WA Building Bonus for people building a new home on vacant land or buying a new home in an off-the-plan arrangement.

In addition, the Federal HomeBuilder Grant provides eligible owner-occupiers with a grant to build a new home, substantially renovate an existing home or purchase a new home off-the-plan.

There’s also the $10,000 First Home Owner Grant and a 75 per cent stamp duty discount on off-the-plan purchases. The impact of this stimulus has been felt strongly with CoreLogic data showing the housing market 0.6 % in October over the previous month and 2.7 % compared to October 2019.

Melbourne’s property market

The property market in Melbourne has been impacted by the strict lockdown laws imposed across Victoria for much of the year. While all capital cities recorded house price growth during the September quarter, Melbourne prices remained steady at $875,980.

However, pent up demand throughout the traditional spring selling months of September and October means the market rebounded well when lockdown laws eased across late October and November.

Government incentives helping Melbourne market back to COVID-normal include the first home owners grant - $20,000 if a property is purchased in a regional area or $10,000 in a metropolitan area. Victorian first home buyers can also save with a stamp duty exemption or 50 per cent duty reduction when they buy either a new or established property with a value of between $600,000 and $750,000.

The future

After enduring a worldwide pandemic, it would be fair to say everyone is hopeful of an easier ride in 2021.

Early indications suggest the economy will indeed keep strengthening throughout 2021. This strengthening will compound if a successful vaccine is developed and lockdowns around the world are ended.

More locally, state and territory borders are opening across Australia and this helps drive employment and consumer spending.

With a healthier economy, comes a flourishing property market. And as Australia’s economy pulls out of the COVID slump, major lenders have reversing their earlier dire predictions and preempted an upwards trajectory across house prices.

ANZ ditched its initial forecast of a 10 per cent drop in house prices in favour of price jumps - 12 per cent in Perth, 8.8 per cent in Sydney and 7.8 per cent in Melbourne.

CBA also tipped a 10 per cent drop in price values, but is now expecting price falls to bottom out during the first few months of 2021 with a 3 per cent recovery in the second half of the year.

Similarly, Westpac anticipated a 10 per cent fall in house prices, but has now switched to a boom of up to 15 per cent between 2021 and 2023. Specifically, prices rising by 18 per cent in Perth, 14 per cent in Sydney and 12 per cent in Melbourne.

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