At the beginning of 2020 there were predictions of up to 30% reductions in housing prices, but over 2020 any downturns have been relatively mild – partly in thanks to mortgage and tenant relief schemes, and Australia’s effective handling of the pandemic to date. So how might Sydney’s property market change in 2021? There are several factors to consider for a Sydney property market forecast.
Given that interest rates are at record lows towards the end of 2020 with the RBA’s cash rate target now at a miniscule 0.1%, it’s unlikely that interest rates will be delaying anyone’s decision to invest in Sydney property any time soon. Now could be the time to take advantage of these appealing borrowing terms.
Consumer confidence has experienced an uptick in mid-November according to the ANZ-Roy Morgan Consumer Confidence weekly report, with a rating of 106.6 up from 99.7 in the last week of October. Given this rating dropped as low as 65.3 in March 2020, it appears people are feeling relatively confident about financial spending leading into 2021.
Federal Budget updates
October’s Federal Budget address covered some important updates that could affect the residential property market. This included:
- An extension to the First Home Loan Deposit Scheme, with an additional 10,000 places available between 6 October and 30 June 2021 for newly built homes.
- Additional low-cost financing for affordable housing through National Housing Finance and Investment Corporation.
- Additional funding for the Indigenous Home Ownership Program, and
- The announcement of changes to ease credit regulations.
While many of the Federal Government’s incentives are geared towards boosting construction, there are still some programs and concessions available for eligible first home buyers which could prompt many to invest for the first time in 2021. The easing of credit regulations could further remove red tape in the lending process.
The diminished migration effect
In a recent article we covered the significant reduction in migration expected over 2020 and 2021, and how this might soften demand within the rental property in larger cities such as Sydney and Melbourne.
With the Australian unemployment rate at 7.0% in October, employment will likely be one of the deciding factors for the property market in 2021. This may very much depend on any further outbreaks of COVID-19 and how these are managed in the relevant region and state.
So what does all this mean for the Sydney property market in 2021? It’s important to remember that Sydney’s property market isn’t one giant market, and certain areas hold their value and demand better than others. Domain reported in September that inner city locations were experiencing falling prices in the inner city while more affordable outer suburbs were experiencing strong demand. Bondi Junction, as one example, has seen house prices hold relatively steady while unit prices have risen since early 2020.
Just as with the stock market during the pandemic, there are always those making the most of uncertainty and change. If Australia can maintain its levels of confidence and navigate its way through pandemic-related measures, there will still be plenty of people looking to invest and sell property. We’ll continue to update you with Sydney property news as we notice trends and important factors in coming months.
Here at Wills Property our real estate team aims to bring you the latest in real estate news as well as providing property management and sales team services. Whether you’re looking to buy, rent, sell or lease in 2021, we’re here to support you.