Property market review: How the property market beat COVID-19 in 2020

Earlier in 2020, when we were coming to grips with a 1-in-100-year pandemic, there were plenty of dire predictions about falling property values. But Australia’s housing market has shown tremendous resilience, and as we head towards 2021, the market is in great shape.

Home values nationally rise 3.9%

The first few months of 2020 saw property values fall in some of our state capitals. That’s understandable as lockdowns ruled out ‘open home’ inspections, and the real estate industry had to quickly pivot to virtual inspections and online auctions.

But the soft patch was short-lived, and the past 12 months have seen home values nationally rise by 3.9%. The strongest results were achieved in Canberra (up 6.8%), Hobart (6.5%), and Sydney (6.1%). However, even in Melbourne, where strict second-wave lockdowns applied, home values are still ahead by 0.7%, and this is expected to climb as the city celebrates a return to more normal conditions¹.

Regional Australia – the big winner

The big surprise of the COVID crisis has been the impact on regional home values. According to CoreLogic, regional housing markets have outperformed our state capitals, with home values rising 4.8% over the past 12 months compared to 3.7% across the big cities.

Since March alone, regional values have soared 1.7%, and it’s all thanks to the newfound popularity of working from home, more affordable price points, lower population densities and lifestyle appeal.

Where to from here?

After the drama of 2020, it’s hard to say with great certainty what will happen next year. But one thing is for sure – several forces have combined at just the right time to support the growth of home values in 2021.

For starters, rock-bottom interest rates mean today’s home buyers can take advantage of some of the cheapest home loans ever seen in Australia. CoreLogic expects this to drive demand further among home buyers² – more so as plenty of renters will discover it can now be cheaper to buy than rent.

In addition, the First Home Loan Deposit Scheme, which lets first home buyers step into the market with just 5% deposit and no lenders mortgage insurance, has been extended to provide an additional 10,000 places. That’s a real plus if you’re finding it hard to save a 20% deposit.

We’ve also seen the $25,000 HomeBuilder grant encourage new home construction. This grant is set to wind back at the end of 2020, but there are still plenty of state-based incentives to buy or build a new home.

Long story short, in 2020 home values have stood the unprecedented test of a global pandemic. As we get ready to flip the calendar, there are good reasons to consider buying today as the property market is well-placed to reach new highs in the New Year.

Contact your local broker today to discover how you could get ready to make 2021 the year to achieve your property goals.