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Mortgage broker's 14 property predictions for 2021

·8-min read
Client giving Australian money to property agent for buying house.
Mortgage broker's 14 property predictions for 2021. Source: Getty

Just as we are about to close the door on 2020, many of us are watching the property market and economy hoping to anticipate what opportunities are likely to present themselves in 2021.

Based on recent events, the state of the nation and our current appetite when it comes to property, I’ve predicted 14 property and finance trends that will shape 2021.

Here they are.

1. The only certainty is uncertainty

There are still so many variables at play when it comes to consumer confidence and our economic recovery and much depends on what unfolds next year.

Economists and property predictors remain conflicted in their view of just how strong a recovery is likely especially as economic support from the government such as Job Keeper and JobSeeker are wound back.

The remaining piece of the puzzle is likely be the potential approval and wide acceptance of a vaccine and what this means for our country going forward. What we do know now is that it is the lack of property on the market is what is currently keeping prices up.

2. That being said - as a broker, I'm very optimistic about the property market in 2021

I really do believe that if Australia is able to keep the virus under control and our consumer confidence continues to increase, there is no reason to believe that the doom and gloom predictions about property bottoming out will come to fruition.

I actually think we could see a revival of the roaring 20s. The growth upward trend is already there, and the RBA has cut the interest rates to incredibly low levels which all add fuel to the property fire. Our regional cities are also holding their own with growth which is adding to a generally stronger property market.

3. 2021 is the year for first home buyers

Everyone is fixing and first home buyers are the first in line to leverage the historically low interest rates.

The government's First Home Loan Deposit Scheme (FHLDS) is about to celebrate its first birthday and has been extended to include an additional 10,000 places for the 2020-21 financial year - assisting first time buyers by guaranteeing their deposit up to the 20 per cent required which is normally subject to lenders mortgage insurance.

Revised property price caps have meant more property is available to those looking to utilise the scheme, encouraging them to continue to enter the market.

4. Nesteggs aren’t as big as they used to be so investors are looking at new ways to generate income

A reduction of interest rates might be great for those who are looking to mortgage, but for investors in term deposits the latest round of rate drops means you are effectively earning $0 on your savings.

This poses a dilemma for older generations of Australians who relied on this form of investment as an effective return for years. Add to this those who have withdrawn a portion of their super (for better or worse) due to financial hardship and the cash normally injected through this method has been reduced significantly.

It has rightfully made some Australians nervous about how they spend particularly many wealthier retirees used the dividend of interest to live off. Many of those who comfortably put their money in cash deposits are now turning to property or shares to try and lift their returns.

5. Tree and sea changes remain attractive and viable

Our remote working lifestyle has taught us that we don’t necessarily have to have our roots planted in a specific location just for our work. Sydneysiders are moving out of the CBD as they continue to work from home with no expectation of returning to the office any time soon.

A word of warning though - keep your escape hatch back to Sydney if you can. You don’t want to make the change to realise it isn’t for you and then find yourself unceremoniously priced out of being able to return.

6. Death of the one-bedroom unit

For many city dwellers, the trade-off of space for “close to CBD” living was one once worth making. As the pandemic took hold, many of these workers began questioning this choice as they quickly fatigued of the same four walls day in and day out.

Whilst it is unlikely that many of us will be returning to the office at full capacity any time soon, the need for an office at home will remain a priority.

7. Investors will have to rethink what their perfect investment property is

Investing in the CBD is decreasing and as touched on, nabbing the one-bedder as a quick and tidy investment is unlikely to yield the results it once did.

Investors are having to take stock of what we are now looking for in our homes, matching the style of property to what each demographic want to live in. Based on this, investments in homes rather than units and in the outer suburbs and regional areas will likely increase to match demand.

8. New builds: Offices will take pride of place at the front of the house

There is no place like a great home office - this is one feature that will dominate the new builds we see in the next year. Simply once a spare room which was converted and made functional, those who are building are keen to ensure that their home offices are built fit for function.

For many this means taking into consideration the size of the space as well as its location on the floor plan. The return of the home office at the front of the home is likely to remain a key feature to these builds as accessibility and minimal noise disruption continue to play a large part in how we conduct business from our homes.

9. Shift towards developments further out of the city

The talk of a “second CBD” is nothing new, but the last five years have seen a large uptick in construction of industrial and trade zones further from the city.

As work opportunities and lower housing pricing continues to appeal in these outskirts, developments will consistently increase out of the city. The urban renewal projects and spending on transport such as the metro will only continue further this appeal.

10. 2021 will be the year for construction

Whilst the construction industry has taken a hit through Covid, initiatives such as the HomeBuilders grant will continue to boost residential construction during 2021.

In addition, some of our state governments have announced incentives to increase infrastructure and commercial construction of government building projects.

11. JobSeekers are artificially keeping our economy high

Australia’s unemployment rates are at their highest since 2001 and economic support such as Job Seeker and Job Keeper continue to prop many financially.

As intended, the increase in the value of JobSeeker payments have ensured money has kept flowing through the economy at a healthy rate.

When this is wound back or the eligibility criteria is tightened, the safety net which has been holding up many Australians will be removed and will certainly test the economic stability of individuals and the country alike.

12. Single women are still buying

Research is showing that single women are leaping into property ownership with 35 per cent of all applications to lenders for mortgages being made by single people and 50 per cent of these are now women.

Beyond purchasing a home, many of these women are directing any surplus funds they have into property investing.

13. 2021 could see Banks become more lenient with lending

The Federal Government is currently behind the push to relax credit laws relating to how much information you need to hand over as a part of the credit approval process. This is likely to include the removal of the forensic investigation into everyone's living expenses.

Treasurer Josh Frydenberg is quoted as saying the changes would “significantly cut red tape and that maintaining the free flow of credit through the economy is critical to Australia's economic recovery plan." These changes are slated to be passed through parliament in March so this will be one to keep an eye on.

14. Changes to responsible lending laws is exactly what we need

The Government has also announced plans to overhaul responsible lending requirements with much of this centred around consumers ability to switch lenders. In addition, lenders can not suggest or offer credit if it is knowingly unsuitable for the applicant.

This industry has had a bad reputation of late for the exploitation of vulnerable Australians and their anti-competitive nature. These reforms are a welcome change and will not only clean up the industry but boost consumer confidence in the lending sector.

Rebecca Jarrett-Dalton founder of Two Red Shoes.

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