2020 was a challenging year for all industries and individuals in Australia. Experiencing fires, floods, high unemployment rates and business closures, this is one year that many won’t forget. Coming into 2020 with the effects of COVID19 becoming apparent, many experts predicted doom and gloom for the property market.
However, with some quick-thinking from a few key-players, the negative impacts were kept to a minimum. 2020 was a year of growth for the Australian property market.
First Home buyer Scheme
With most economic data pointing towards a year of low-growth and low-demand in the housing sector, the federal government scrambled to introduce policies to stimulate the market.
On January 1st, 2020 the Australian Government introduced the First Home Loan Deposit Scheme to support eligible first home buyers. This allowed first-time home buyers to enter the property market sooner than they would otherwise be able to. This was introduced in the hopes of improving the demand for housing in Australia.
This scheme has proved very successful. ABS reporting the amount of new loan commitments from first home buyers has risen by 31.2% increase from last year.
Real Estate Agent solutions
Then Covid19 spread nationally in March. Which mean the month of April was one of the worst for auction clearance rates and listings. With social distancing rules, it was hard to get people in to see a property, making it unlikely to sell. Many thought this trend would continue for the remainder of the year. However with some crafty thinking from Real Estates and other agencies, online solutions were quickly adopted. In the form of virtual tours and online auctions.
Whilst this proved more tedious, Real Estate Agents found that the individuals that booked private inspections or virtual house tours were more serious about buying and ready to make a deal. This minimised the amount of ‘time wasters’ and created efficiencies in the real estate industry.
RBA Rate cuts
Even with the first home buyers scheme and Real Estate craftiness, the housing market was still not where it needed to be. Luckily for the Australian economy, the RBA recognised the threat early-on and planned out a succession of cash-rate cuts to stimulate home loans.
The cash rate now sits at 0.10%, a historically low rate for Australia.
Looking at the numbers, this scheme has been very successful with loan commitments rising 8.6% in December from the same time in the previous year, and business construction loans grew a whopping 106% in the same period.
A look at 2021 Predictions
2021 has started strong with clearance rates exceeding 86% in NSW and VIC in the last week of January. Experts say that due to the restriction caused by COVID19, household saving has increased dramatically with these levels not seen since the mid-1970s. This suggests there will be an increase in property purchasing. Along with the increase purchasing, property prices are expected to continue to rise in certain areas. Corelogic reporting that housing values have risen up 0.9% over the month.
This year has shown an increase in popularity in regional areas, so we can also expect to continue to see this trend, with millennials leading the way.
2021 has been quickly perceived as the year of recovery, however with so many economic challenges to overcome, its hard to be definite with predictions just yet.
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