Insight

12.01.21  Buying Tips

 

What Buyers Need To Know About The Property Market In 2021

We reveal the seven things buyers need to know about the property market as we enter 2021.

1. Stock levels are at all time lows

You can’t talk about the state of the property market right now without first talking about the exceptionally low level of listings. There simply aren’t many properties coming to market right now and there hasn’t been for some time. In fact, in May 2020, CoreLogic reported they were at their lowest level on record. They’ve certainly improved since but as of December 2020 were still 20% below the same time in 2019.

We believe this is happening for two main reasons. First, it’s part of a wider trend. As we’ve previously reported, compared to a decade ago, Australians are staying in their home an average of more than three years longer.

The second reason is, of course, the uncertainty surrounding COVID-19. When uncertainty strikes, people are always tempted to ride out the market to see what happens, so they’re less inclined to list their home. So less properties are available to buy.

2. It pays to be decisive

Even though there are fewer properties for sale, the same can’t always be said for buyers. With record low interest rates and generous first home buyer grants on offer, a lot of people see this as a good time to buy, despite the current uncertainty. So the market is competitive for buyers.

With that in mind, if you’re in the market for a new property, it pays to put your best foot forward and make a strong offer. Otherwise, you’re likely to find someone else is willing to.

3. Not all markets will behave the same way

As we’ve written many times before, the suburbs property market isn’t one market but many market but many. The trends affecting prices in the family home market aren’t always the same as those in the one-bedroom apartment market. Over 2020, we saw house prices rise rapidly in many areas, while apartment prices stayed stable. We also saw strong competition in many parts of the premium market, while a lack of investors made the market for off-the-plan apartments less competitive.

Over 2021, we’re likely to see a similar story, with some parts of the market - and some suburbs - rising more rapidly than others.

4. Stamp duty reforms are coming

To help people into their first home or next home, the NSW government has announced it intends to scrap transfer duty, or stamp duty, and replace it with an annual property tax.

Transfer duty is one of the biggest impediments to purchasing a home, especially here in the eastern suburbs where prices tend to be well above average. The stamp duty payable on the median Paddington house price of $2.5 million is $122,505. In Bellevue Hill, where the median house sells for $5.8 million, the average stamp duty comes in at an eye-watering $344,490.

That said, while scrapping stamp duty is aimed to make it easier to get into the market, don’t be surprised if it has the reverse effect. With less to pay up front, people will have more money in their pocket to put towards a home. This may well push prices upwards.

5. Many of the best properties will never go to market

It may be easy to look for a home on one of the two major property websites, realestate.com.au and domain.com.au, and to believe that’s all there is on offer. However, in today’s market, many of the best properties won’t be listed there.

Increasingly, many sellers are choosing to list their home off-market, looking to find a buyer through their real estate agent’s network of contacts, without publicising it more broadly.

To find these properties, you really need to establish a relationship with a real estate agent. We commonly sell around half of our properties this way, so if you haven’t signed up to our off market listings, I’d recommend doing so right away.

6. There’s nothing wrong with buying before you sell

A lot of people can be reluctant to buy before they list, fearing that it’s an unnecessary risk. The worry is that they may not be able to sell in time and that they’ll be left paying two mortgages or being forced to delay settlement and incur massive penalties. Otherwise, they worry that they won’t get enough for their home and won’t be able to afford the place they buy.

My view is that there’s nothing wrong with buying first in a seller’s market like this one. The reality is that your property will almost certainly sell, so long as your price expectations are reasonable. A good real estate agent will be able to give you an idea of what to expect as a minimum.

And, if you’re concerned that you won’t be able to settle your sale and purchase at the same time, try to negotiate a longer settlement period on the home you’re buying. Many vendors will happily agree to a settlement period of up to 6 months with the ability for the purchaser to shorten if required.

7. There’s always a reason not to buy

Finally, it’s worth remembering that there’s always someone who’ll be warning you about the dark clouds on the horizon and telling you this is a bad time to buy. But, in my experience, trying to time the market rarely works. When COVID-19 first struck, the experts told us to expect across-the-board falls of up to 32%. Instead, the market stayed stable and, in some cases, rose sharply.

Take, for instance, Woollahra, where the median house price lifted from $2.88 million in April to $3.7 million in December - a rise of 28.5% in just eight months, according to relaestate.com.au data. If you had ridden out the market to wait and see, you're likely to have found yourself in a much worse position.

What’s better than trying to time the property market perfectly is to buy when it suits you. If you’re looking to make a move in 2021, act decisively and do what you believe is right.

Want more?

If you’re interested in buying or selling in Sydney’s East contact my team today.

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Market Report: December 2020