The property outlook for 2021 is a conversation starter at any dinner table (or perhaps it’s only at mine!) as we all are wondering “where to from here?”
We can rest easy according to those ‘”in the know” who attended the API & Reiwa 2021 Property Outlook seminar this morning where industry leaders, analysts & commentators unanimously agreed that the key fundamentals and drivers are in place to see a continued positive upwards trend for our residential market – both rental and sale. COVID-19 needs to stay away from our WA shores for this to happen.
Noted below are some interesting facts I collected from Damian Collins (REIWA president) Aaron Morey (Economist), Brendon Ptolomey & Gavin Hegney (commentators & Valuers) and Daniel Cooper (BGC CEO).
Key fundamentals underpinning growth in our economy include:
• WA’s strong commodity markets – WA’s population growth of 1.5% with an influx of expats to our jobs driven economy. We are fortunate to be in a strong economic position however skill shortages were discussed and continue to be a concern.
• Federal stimulus – keeping our employment relationship intact. To date we have received $17B from the federal government into our economy and WA is able to spend a significant amount of stimulus on retail and recreation which has resulted in a 15% year on year growth in the retail sector. Although job keeper payments are coming to an end (see graph 1) household deposits & savings have increased meaning households are well placed for this transition.
• Border restrictions & WA’s ability to control the virus (so far!) – no more needs to be said here
• Low interest rates – expected to continue for 2021
Looking ahead
• Continued population growth is contingent on border restrictions and containment of COVD-19. We need to attract skilled migrants for when the expat & interstate are driving it currently however this will eventually slow down.
• There’s potential for above average migration flows if WA creates jobs to attract migrants
• Sales activity will shift away from land to established dwellings
• Listing for sale increase as sellers return to the market
• Property values continue to rise supported by low interest rates – this is expected to trend above historical average rates of growth
• Interest rates will remain low for 2021
• With renting and ownership both costing the same (approx.. $20,000 p/a) there could be a shift with exist tenants to purchase their own homes
• Federal stimulus coming to an end
• Strong market fundamentals of low Perth vacancy rates and annual growth in rental prices
Other interesting facts
• It’s important to note that currently we have a severe rental shortage crisis (rental increases are up to 20%-25%) and a severe lack of supply not an affordability crisis (property is still cheaper than 2014).
• SEVERE RENTAL SHORTAGE + SEVERE LACK OF SUPPLY = HOUSE PRICE INCREASE.
My final thoughts
If you are thinking of upsizing, now is the time.
Investing, it’s time to return.
Or hold on and reap the rewards!
Kind Regards,
Mareena Weston
Sales Consultant
0422406199
mareena@edisonmcgrath.com.au