The New Boom
Embracing 2021 and leaving the now un-named previous year behind, Domain looks at some of the property hotspots predicted for the new year as city dwellers re-evaluate their lifestyles ‘post’ pandemic. According to the article there seems to be a push from the inner city areas towards more outlying areas of the capitals, and satellite cities. For Sydney, this includes areas like the Central Coast, Newcastle, Bowral and Wollongong, all of which “can’t get enough stock to sell”.
Interestingly, the same sort of effect is reported as occurring around Byron Bay, suggesting the town is in effect acting as its own regional capital. More on the huge inflation and spillover effect on Byron and its satellite areas can be found here. In a similar vein, the ABC as well reports, based on similar data, that rental vacancies in coastal towns such as Byron are heading to zero, as ‘cashed up city-dwellers’ make a break for bluer skies, and that locals are starting to suffer as a result.
In the category of ‘all things being relative’ Domain posted an interesting story by Rachel Wells about how the big contraction in household spending over a lot of 2020 (except in regards to toilet paper of course) actually allowed around $100 billion to be paid back to the banks, reducing the overall level Australian household debt to some extent. Coupled with low interest rates, a dip in property values, and the Government stimulus packages, a little breathing space for households generally seems to have flowered.
The fear is of course, that having got a little breathing space, households en-masse think they are actually out of the woods debt-wise, and completely let go with their spending, putting them in a worse place financially than they were before. ‘A little breathing space’ is not the same thing as being ‘debt free’, which in turn is not even as good as having debt free savings or investments.
For example, an article in SMH states that new loan commitments for housing rose 5.6% to $24 billion in the month to November according to the Bureau of Statistics. This is a record, and the second month in a row the record was broken. If that trend continues to rise the article suggests it will not be long before the RBA starts to get nervous, moving the deckchairs around as required.
Looking to the future, pundits via Domain are starting to predict a relatively huge rise in values this year, Melissa Heagney citing NAB group chief economist, who forecast rises of up to 10% in some areas, and 7-7.5% in Sydney and Melbourne. The CommBank head economist Gareth Aird predicts a 9% rise in house values, and up to 5% for units.
realestate.com.au is also bullish in its outlook, citing the ME Quarterly Property Sentiment Report, with positive sentiment, great expectations and good vibes, galore.
Having said that, as the article says, previous well publicised forecasts last year (in, of course, exceptional circumstances) predicted a 10-30% fall in values, which clearly completely failed to materialise, so in that ramification for the removal of the Government Coronavirus stimuli are yet to be realised, perhaps don’t bet your bottom dollar on that outcome quite yet.