Should I Buy a House Now or Wait in 2021 & 2022?
Many of you might still be asking yourselves the question ‘should I buy property now or wait? Does property investing in 2021 mean taking a gamble? or ‘am I missing out by not investing at this time?’
It’s crucial to note there’s no singular market at any point in time, whether it was ten years ago, five years ago, two years ago, two months ago, or right now. At this moment, some markets are going up in value, and some markets are going down in value. Some markets are plateauing and going sideways. But there is no single stock property market.
There are 15,000 suburbs in Australia in the property market, which means there’s always markets that you can invest in that will go up. So, the quick answer is ‘yes, it is the right time to be investing.’ But it is always the right time to be investing. There’s always a good time to be investing in property, provided you know where. If you don’t know where then it can be much more of a gamble.
Are you not convinced? Here is a quick Australian housing market update, which will discuss thirteen data-driven points on why it makes sense to invest right now!
Price is always dictated by supply and demand. The supply of dwellings listed for sale now is twenty per cent lower than two years ago or twenty years ago. We are, right now, in an environment where there is hardly anything for sale, and expected stock volumes mean that even if demand wasn’t high, supply is so low that prices will still increase.
2. Rental stock
The number of properties available for rent across Australia has fallen sharply from the last three years to right now. We see that in so many markets around Australia, it’s hard to find a place to rent. Rental stock being at a record low is a real problem for those looking to rent. But from an investment perspective, there is a record number of tenants looking for rental properties but hardly any options. This results in a rent increase and reduces vacancy rates.
3. New Stock
New dwelling commencements or new builds over the two years ending last year
were about fifteen to twenty per cent lower than the previous two years (despite the wide distribution of grants). Even though building approvals have increased more in recent times, they were still very low in the last two years. That means that demand is high, and hardly any new stock is coming into the market. Once again, low stock means that prices go up.
4. The influence of regulatory bodies and the Government
For the first time, after about six or seven years, our governments and prudential regulatory bodies are on the same page. RBA wants housing prices to increase to bolster the economy, APRA wants sustainable house prices, and the government is injecting plenty of stimulus into the economy. These parties are flooding the property market with so much stimulus and favourable policy that prices and demand increase. People can often underestimate how much of an impact regulatory bodies have, but in reality, they can make a remarkable difference.
5. Cost of Credit
Interest rates are at record lows. Many people will talk about how when interest rates rise, the property market will crash. The property market was booming back in 2013, and interest rates were two to three per cent higher. Right now, the cost of credit is very low, so this boom is not abating anytime soon.
6. Buyer inquiries
Online search interest is at a record high as well. This can be tracked through people looking for houses on websites such as Domain and realestate.com. This is a good leading indicator of what’s to come in terms of demand.
7. First homeowners
For the last decade, first homeowners have been very present in the market. Homeowner deposit schemes and various state government schemes have broken down entry barriers for first homeowners, which is driving this boom. When investors drive a boom, it can be a bit unpredictable. But when a boom is driven by first homeowners or by owner-occupiers, the last thing they want is to sell that property, and so that boom becomes much more sustainable.
8. Working from home
Many people are changing their lifestyle habits, and they need an office space at home or just needing more space at home because they’re not commuting to work as much. What that means is that these people are upgrading and changing their dwellings, which drives activity in the real estate market, and activity is a sign of demand
9. Australia’s COVID response
A current factor to consider in asking the question ‘should I buy a house now or wait?’ is Australia’s appeal in the current climate. Australia has an international reputation for having a tremendous COVID-19 response. This means that lots of expats are returning home, driving property prices up. As soon as immigration is permitted in Australia, an influx of immigrants will be a huge catalyst to further that demand.
10. Stamp Duty Requirements
Various state governments have changed their stamp duty requirements. For example, Melbourne applied fifty per cent discounts, and New South Wales was considering abolishing stamp duty. All of a sudden, properties become so much cheaper because there’s less stamp duty to pay or no stamp duty.
11. Investments by Governments
There’s an additional fifteen billion in infrastructure spend committed over the next four years by the federal government (which are more reliable than state governments) and an all-time high record of investment in infrastructure by basically every state government. This is to boost the economy, which will further increase demand.
12. Increase in workforce
Many industry sectors need to expand their workforce in the short term. This includes sectors like advanced manufacturing, health, agriculture, renewable energy, defence. These areas of the economy need a much more skilled workforce, and whether these people come from overseas or are trained locally to fill that void, it will bring more people to Australia.
This will, inevitably, increase housing demand.
So, there you have it — a quick property market update which hopefully helped clarify the answer to the question of ‘should I buy real estate now or wait?’
Still on the fence or struggling to decide whether ‘now is the right time for you?