I think to everyone’s surprise, the Australian property market overall has been doing very well through the virus period of 2020. While most people would have thought property prices would have slumped, prices have actually been booming in certain locations around Australia.
Capital cities have all been on the increase except for Melbourne. With the Dan Andrews Labour government hotel quarantine fiasco giving Melbourne a second round of more stringent lockdowns, many Victorians are no longer wanting to call Melbourne home and have been migrating away. With the reduction of the influx in overseas immigrants, Melbourne property prices have really suffered.
There have been winners from this change though. Brisbane and the Gold Coast have been big winners from the movement in population with demand for property in SEQ at very high levels. Given the fact that supply is also low in that area, prices have risen significantly over the last year and are showing no signs of slowing down.
While Sydney has been very steady and really bumbling along with no great gains, its close neighbour Canberra, which main employer is government, has been a good performer. I believe this one factor is that government job growth and job security is a given with the government and hence during the COVID period, Canberra residents felt safe and thus were happy to spend.
How was the slump avoided?
There are a couple of factors that have contributed to this. One obviously is government grants. There has been a huge amount of spend to get the economy going and keeping everyone paid. Job keeper was introduced and dole payments were doubled to ensure people did not do it tough. Huge grants were given to first home buyer looking to get into the market. These government handouts alone were enough to get things going but when combined with the right time in the market cycle and historically low interest rates, it has been a perfect storm.
Will it continue?
Yes.
Although there was some concern that when the grants stop the market will also stop. I think this is not altogether true. Although there has been a lot of government grants available, most buyers that are buying now are not entitled to any grants. The high-end sector of +$3m in QLD is on fire at the moment with huge gains made over 2020. So, the market is not solely relying on the grants at the currently for sales.
Furthermore, investors have also gained confidence and are now stepping up and getting on the rising market. I think the market still has a long way to increase yet.
