There are likely many factors that are the cause for the unprecedented rise in property values across Australia and more strongly here on the Sunshine Coast. And while property owners understand that prices are at a record high, meaning NOW is a fantastic time to sell, one study suggests that two-thirds of Aussies think now is also a great time to BUY. The buyer numbers we are seeing are phenomenal!
Here are my thoughts.
- People are flocking to the Sunshine Coast seeking space and lifestyle.
We’ve never seen a larger number of people seek haven on the Sunshine Coast with migration levels 90% above the decade average. In 2020, figures indicate that 25,000 people made the move. On top of that, according to one report, 450,000 Aussie’s returned home during the pandemic. With fewer people needing to work in the big cities, regional parts of Australia have seen record growth with regional Queensland experiencing growth double that of Brisbane in the past few months alone. I would suggest it’s closer to 10% on the Sunshine Coast. And who could blame them, we live in the best place on Earth!
- People have more money to spend.
With travel put to a holt, likely not resuming until 2022, people have more disposable income with an estimated $65 billion spent in the previous year on travel which is now being absorbed locally. Naturally, this money goes to one of two places, savings or reducing debt, and spending. While many industries suffered due to the pandemic others seem to be thriving with more people spending their money on everything else other than travel. On top of this, we’ve had a mortgage holiday and many government grants which may slow or stop at the end of March.
- Interest rates are low and borrowing capacity has increased.
Current interest rates for many borrowers at the moment is anywhere from 2% to 3% depending on whether it is a fixed or variable rate. What is not so common is that fixed rates are now lower than variable rates which haven’t always been the case. For example, on an average loan in Palmwoods (House price $583,000), weekly repayments would be $472 p/wk with a 4-year fixed-rate loan compared to $531 p/wk with a variable rate loan. Banks make borrowing capacity calculations on a higher rate which according to Michael Yardney, have been typically at a margin rate of 2.5% meaning at least 5.4% or higher. However, this has recently lowered to around 5%. Money is cheap!
- Shortage of land and houses for sale.
Nationally, the number of listings is reported to be 3.3% lower than the same time last year and 13.3% lower than the five-year average. Locally the story is much the same. Due to this shortage, I predict that we will see buyer behaviour change. Already, I have seen an increasing number of buyers seek me out directly to help them find a property. Social Media, in particular Facebook, is creating a huge reach with many more properties now selling there without the need for expensive marketing campaigns. A very important reason why when selling, you should choose an agent who is local and active in the area as they will have the buyers who are ready to purchase.
Post-COVID all the signs pointed to a downturn in the economy, a crash in property values of up anything from 10% to 30% and beyond and an unemployment rating rising to 10 %or 20%. This has not been the case. 2021 is looking to be another incredible year in real estate.