My dear friend Jo Vadillo agreed to present at She Renovates Live and then I cut her presentation short – so, to make it up to her I invited her to chat to us on the podcast about what has happened in the australian property market in the last two years and what we can expect going forward.
By looking back over the last year or so on what has happened in the australian property market is an important exercise. The past can inform what is going to happen and how we are going to approach the future.
The banks have led people to believe that because the property prices in australia went up so much last year, they will drop just as much this year. Unfortunately that is highly unlikely. The banks also predicted a 40% drop in prices at the beginning of COVID. I think it is safe to say that no one knows.
The Australian Property Market In 2021
Jo says that 2021 was a very busy year for her business. She is based in Sydney and focuses a lot on the Eastern Seaboard of Australia. Jo said:
For property buying, it was incredibly competitive and prices were climbing literally week to week.
There was a lot of pressure to move at the same pace to complete deals according to a client’s specific brief and budget. People also did not make big decisions about investing. The uncertainties created by extended lockdowns in australia had a big impact on the property market. A lot of people weren’t selling their properties unless they really had to, usually because of death, divorce or desperation.
Jo saw a big rise in the markets outside the city; people moving to the trees or the sea. Since the workplace had changed the way they operate, people realised that they didn’t have to pay exorbitant mortgages to sit in their living rooms in the city. They could just as easily work from somewhere else.
Jo went on to say that there was very little stock but a lot of people who wanted to move around. That created a seller’s market. She said:
And it just didn’t stop. Once it started, the market just went up and up and up and up and up, and it just did not show any sign of stabilisation or plateauing.
COVID restrictions changed the way properties were sold. Instead of having hordes of people traipsing through an open home on a Saturday, prospective buyers had to make appointments to view the properties. That means only the well-qualified buyers were looking.
The Move To Online Property Auctions
For a period of time auctions were done online. Some of the fanfare and the circus chaos of a live auction was lost as agents had to deal with internet lags and delays. The tension, competitiveness and fear of missing out was missing.
Time waits for no one. Properties were selling like hotcakes. That means that buyers needed to be really well equipped. They needed to have done their due diligence and their offer needed to be watertight. Swift decisions were the order of the day. It paid to have their legal team ready to review contracts before they signed anything.
A Rise In Off-Market Properties
In the last year and a half Jo’s company has seen an increase in the number of off-market properties. She has found this trend to be especially strong in Brisbane.
During COVID people didn’t want to have a lot of buyers walking through their homes due to health reasons and fears. People who are downsizing are commonly in a higher risk age bracket. But the demand was there so it was a win-win situation. Agents knew that they could get a strong price, even without a full marketing campaign.
Jo Explained that the properties are not being listed on Domain and Real Estate, but they do appear on agencies’ websites, or the LJ Hooker or The Bill Property. Agents are notifying their buyers of properties for sale via SMS or their IP database.
Serious buyers get a bit of a tip off about properties they may be interested in. They are able to do some research at home before going to have a look at the property. All before the property goes live to the masses, creating a lot more competition.
Brisbane Has Seen A Surge In The Property Market
It seems that everyone I speak to is talking about investing in Queensland. Jo said:
The Brisbane market has been long overdue for a big rise… it lagged for a long time.
Brisbane offers great affordability and a better quality of life. It was recently announced that the 2032 Olympic Games will be hosted in Brisbane. It may not be the key catalyst, but Jo has seen that investors feel more comfortable to invest there now.
Flooding is a concern for people living and investing in Brisbane. The last floods in the area were in 2011. As a result of the flooding, the council has some user-friendly interactive flooding map guides. For Jo, this is a prerequisite for purchasing a property in the area. It is best to ensure that your property is outside the flood zones. This will push up prices in these areas even more.
What Can We Expect From The Australian Property Market Going Forward?
“No one knows precisely what’s next”, said Jo. She has been doing her research and this is what she expects to see happening in the property market going forward:
- An increase in demand for inner city apartments with the return of migration and overseas students.
- A softening in the regional shift growth as a sense of normalcy returns.
- Diminished borrowing capacity with rising interest rates.
- A stronger growth in property prices in smaller cities such as Brisbane, Hobart and Adelaide.
- The Australian property market will still be very buoyant in 2022.
- The building industry will continue to be under pressure.
As Jo said, No one can know for sure what this year will bring, but she has shed some light on what the property market may do in the next few months.
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