Timing is Critical: The Window of Opportunity

There has been a significant amount of commentary around the Australian property market in 2020 in the context of COVID19, and many attempts to predict what’s around the corner in 2021.  One thing that is clear is that many of the dire predictions about the Australian property market falling off a cliff, just have not come to fruition.  Despite coronavirus lockdowns, recession, and rising unemployment – our property market has remained one of the most resilient in the developed world.

Why has the Australian property market weathered the COVID storm so well?

Whilst no one is denying there has not been some pain to be had; overall it is suggested we have weathered the storm because of the following:

  • Historically low interest rates making it easier for many homeowners to keep up their repayments
  • Homeowners struggling financially were able to defer loan repayments
  • Banks continue to be supportive in assisting homeowners retain their properties – it is not in the banks best interest to see a large number of mortgagee sales and house prices tumbling
  • Federal and State Government stimulus packages
  • Government policy released in Federal Budget to boost consumer confidence and generate economic activity and investment

These factors combined with the recent announcement of sweeping changes to remove overly restrictive lending rules, coming into place in March 2021, which will give more people easier access to credit and increased borrowing power is quite the ‘game changer’. This is a move that has been welcomed by the property and banking industry alike as well as buyers from owner-occupiers through to investors.

What is going to happen to the property market in 2021?

Whilst no one has a crystal ball, it is looking positive, when taking all the above factors into account as we head towards next year, with the possibility of a very buoyant market in the second half of 2021 leading into 2022. Combined with the easing of credit approval criteria, a return of international demand for Australian property, along with a return of immigration and foreign students (date still unknown) – property commentor Michael Yardney says the writing is on the wall for “the perfect storm”.

Basically, the bottom line in all this, is that there is a window of opportunity between now and the second half of next year for investors to position themselves favourably, by acting now whilst there is still some uncertainty in the market, before confidence surges.  By acting sooner rather than later, and not waiting to hear property values have increased and auction clearance rates are up; you will be competing against fewer buyers giving you heightened negotiation power.