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Prices, lockdowns, competition: 3 spring property predictions revealed

·4-min read
Aerial shot of Sydney suburbs in Spring with jacarandas blooming
The Spring property season is upon us. This is what you need to know (Source: Getty)

The Spring buying season is upon us and while it will look a little different for those stuck in lockdowns there is still plenty to look forward to.

So, what can we expect for the Spring property season?

Here is your guide to lockdowns, prices and what to expect from the competition.

What to expect from prices

Prices are set to rise but not by as much.

NAB executive, home ownership, Andy Kerr told Yahoo Finance that the ever rising prices we’ve seen have started creating affordability issues.

“Record low interest rates and government incentives should keep demand strong through 2021,’ he said.

“However, we also recognise rising prices are creating an increasing challenge, particularly for first home buyers as supply remains below average.”

Kerr said NAB is expecting home prices to rise strongly this year, but will slow in 2022.

“Given this backdrop, from here we see the monthly pace of house price growth slowing - but continuing at a solid rate, with dwelling prices up around 18.5 per cent in 2021 and 3.6 per cent in 2022.”

The most recent Finder RBA survey found that experts are predicting the property market to continue to run for the next 12 months.

It is predicted prices will rise around 9 per cent in Melbourne, bringing the average home price up to $817,114.

It also predicted an 8 per cent increase in Sydney which would see property prices increase another $76,619 on average.

What to expect from lockdowns

Lockdowns have had little effect on prices, but have affected how we buy homes.

Graham Cooke, head of consumer research at Finder, said that lockdowns seem to have had little effect on house sales.

"The average Sydney homeowner earned more than the median family wage over the last 12 months in property equity alone, and it looks like they are set to repeat that over the next 12," Cooke said.

But, whole prices have yet to be impacted by lockdowns, the ways in which we go about viewing or bidding on a home has been changed significantly.

“We are continuing to simplify and digitise the home lending experience. Before the pandemic, no NAB home lending appointments took place via video,” Kerr said.

“Now, more than 40 per cent are held over Zoom, equivalent to thousands of conversations over video every month.”

Commonwealth Bank (CBA) predicts the upcoming spring buying season will be the most digital on record.

“Restrictions around movement and face-to-face meetings as well as COVID-19 induced policy changes around government processes has meant the home buying process has become increasingly digital,” CBA executive general manager of home buying, Dr Michael Baumann said.

What to expect from the competition

First home buyers may need to think outside the box.

Thanks to the Government's first home buyers scheme, young Aussies have been flocking to get home loans, NAB said.

“We continue to see great momentum in the housing market and in the first week of August, we saw our strongest demand in home lending applications since February 2021,” Kerr told Yahoo Finance.

“Demand has been the strongest we’ve seen in a generation with NAB first home buyer activity up 55.93 per cent across Australia.”

However, just because first home buyers can get their hands on a loan doesn't mean they can score the home.

CBA said first home buyers are going to be facing off with investors who have been benefitting from the current low rate environment.

Mortgage approvals for investors climbed to 29.4 per cent in July this year, up from 23 per cent in October 2020, CBA said.

“The current low rate environment is attractive to investors seeking a higher yield on their investments,” Baumann said.

“The huge injection of government stimulus into the economy over the past 12-18 months will also see some investors who fear inflation invest in property which will further increase the investor mix of new approvals.”

Baumann said there are affordability problems for first home buyers who are simply getting priced out of the market.

“As we enter the spring buying season, there are affordability challenges for first homebuyers, however, availability of spots via government home buyer schemes will alleviate some of this stress,” he said.

NAB’s Kerr said not all is lost for first home buyers though as the COVID-induced lockdowns created a new work environment.

“What we have seen through the pandemic is that flexible and hybrid working is providing more options than first home buyers have historically had,” Kerr said.

“Our research shows a shift in where they want to buy and property prices have not risen as much in outer-metro suburbs.”

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