The pieces to the property puzzle are falling into place and our property markets are on the move and will perform strongly in 2021.
Last October in our regular Property Insider videos – we announced that Australia’s property markets had turned the corner after being put on pause by the coronavirus-induced lockdowns which caused “the recession we made us have.” 
But now it’s official, our property markets are performing strongly.
In fact, some commentators are even calling it a “Boom”, with property values rising as more Australians are looking for a new home or to upgrade their homes at a time when there are fewer properties on the market.
As we enter a new year and in fact a new property cycle it’s interesting to look back and see what lessons we can take out of 2020 to make 2021 a better year in property.
And who better to discuss this with than Dr. Andrew Wilson, Australia’s leading housing economist and chief economist of my HousingMarket.com.au
Apart from sharing some lessons from last year, when you watch the video Dr. Wilson gives some forecasts for 2021. He sees strong growth ahead and even the possibility (but not the most likely case) of double digit growth in some capital cities.
It’s been an unusual year and an unusual recession hasn’t it?
Despite a deep recession, chronically weak wages growth, high unemployment and underemployment rates; Australians are accumulating strong gains in their wealth, and our property markets have been remarkably resilient.
Watch today’s video as we share some lessons from the last couple of years as well as look at some of the data that has come out recently giving us a guideline as to what’s ahead for our property markets
Lets’ start with some lessons:
1. Australia’s property fundamentals are sound 
Watch Dr. Andrew Wilson explain some of the fundamentals that will lead to strong property market in 2021.
Clearly, these were put on pause due to the coronavirus-induced lockdowns last year.
2. Be careful who’s forecasts you listen to
If you had listened to all the Negative Nelly’s and Property Pessimists who grabbed the headlines in the first half of last year you would have sold up your home because they clearly told us it’s price would plummet.
What happened to all those predictions of 40% house price falls for the Australian property markets?
And property investors would have missed out on some great opportunities.
Lower interest rates and significant government intervention not only kept businesses alive but supported our property markets.
3. Property investing is a game of finance- with some houses thrown in the middle
This became clear as APRA tightened the lending screws on property investors from 2014 through till 2018 causing the biggest decline in our property markets in modern history.
Then when the banks’ lending criteria became more relaxed and interest rates fell in 2019 our housing markets started to pick up, but then they were put on pause for much of 2020 because of the coronavirus induced recession we were made to have.
4. There is not one “Australian property market”
While the fundamentals of long-term population growth and the wealth of our nation will underpin the Australian property markets, there is not one “Australian property market.”
Each State is at its own stage of its individual property cycle and within each state, there are many markets segmented by geographic location, dwelling type, and price point.
Expect the Unexpected
Every year an unexpected X factor comes out of the blue to undo the best-laid plans – some on the upside (like the miracle election result in mid-2019) and sometimes on the downside.
Sometimes these are local issues and at other times they come from overseas.
Let’s look at some of the new pieces to the puzzle that occurred over the last month:
1. Australia’s economy is recovering faster than most expected
Watch today’s video as we discuss Australia’s strong economic recovery.
It seems like we may have a V shape recovery after with most economists expecting Australia’s economy to rebound strongly in 2021.
COVID numbers are very low, the vaccine news is excellent and confidence is rebounding, Victoria is catching up to the recovery already underway elsewhere, there are heartening
While the damage of last year hasn’t disappeared, it is slowly unwinding
Source: Deloitte Access Economics
2. Unemployment is falling
Nearly 13 million Aussies are at work and unemployment fell to 6.6%; another significant sign of the nation’s rebounding economy
35,700 new full-time workers entered the workforce in December while 14,300 Australians found part-time work.
Clearly, we’re working our way out of recession faster than most expected.
Source: Finder.com.au
3. Housing loan approvals surge to be 24.4% above pre-pandemic levels and highest on record
New housing loan approvals continued to surge in November.
Investors, who had largely retreated from the market in the first half of 2020, posted a 6.0 per cent rise in November, the sixth consecutive monthly increase.
And lending in Victoria surged by 20 per cent over the month as pent-up buyers did the rounds at onsite auctions and open homes when their lockdown lifted.
Source of Charts: NAB
4. Consumer and business confidence is rising
Consumer optimism and home buying sentiment has reached a pre-pandemic high according to research by finder.com.au.
67% of Australians think now is a good time to buy a property, up from 42% in April 2020.
Of course, this is the type of self-fulfilling prophecy at FOMO will set in and the property cycle will continue (as it always does.)
Source: Finder.com.au
5. The number of properties for sale in Australia is beginning to dry up
Watch as Dr. Wilson explains that even though more properties have come on to the market in the beginning weeks of January than occurred this time last year, because many transactions have occurred buyers are facing a shortage of stock
Strong demand at a time of limited supply must lead to property price growth, but don’t get lulled into a false sense of security by our rising property markets.
As always correct property selection will be critical for the long-term performance of your investments. You can’t expect to get top investment performance from a secondary property.
6. First home buyers are making their mark
At the end of last year, we experienced the biggest lift in new home sales in 20 years, despite the pandemic induced recession
Clearly, there was a rush to take up the various grants offered.
7. We are not going to fall of the fiscal cliff – the mortgage time bomb isn’t going to explode
APRA (the Australian Prudential Regulatory Authority) released data on loan deferrals to November 2020, which reveals that the number and value of deferred mortgages has continued to plunge.
The number of mortgage deferrals had shrunk from a peak of 488,249 mortgages in May to 118,919 mortgages in November.
As a percentage the share of total mortgages deferred plunged from a peak of 11% in May to just 2.8% in November.
Not surprisingly, Victoria had the highest share of mortgages deferred in November, (the period being reported) but things have improved considerably since then.
Source: APRA
The bottom line….
While there are still many challenges ahead for our economy and our property markets, there are now many reasons to be optimistic about selected segments of the Australian property market, particularly in the long term. 
While property values showed resilience through the difficult Covid19 induced property cocoon of 2020, the rental markets in certain parts of Australia were hit quite hard.
And while prolonging vacancies and falling rentals have concerned some investors, others have fared quite well as it has really been a tale of two rental markets around Australia.
On the one hand, house rentals have remained firm and in fact increased significantly in some cities that were largely unaffected by COVID-19, while on the other hand apartment rentals have slums, particularly in the Melbourne and Sydney CBD’s.
Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on
If you’re confused about the mixed messages in the media you are not alone.
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from Property UpdateProperty Update https://propertyupdate.com.au/property-news-headlines-forecasts/
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