What a crazy year 2021 is turning out to be for the property market! Let's take a look at some of the important things you should know about what's happening in the property and building industry so far this year.
The Home Builder Grant introduced by the government in 2020 really put a kick up the backside of the building industry. Combine that with the lowest interest rates Australia's ever seen and we all of a sudden start seeing the property industry boom once again. Despite the constant fears of a market crash from the naysayers and the media (the same people who have been predicting a crash every year since 2015). Just to put it all in perspective, this is also coming off the back of the biggest uncertainty the employment market has ever seen since the financial crisis of 2007-08 - the Covid 19 crisis.
It just goes to show that in times of panic or in times of uncertainty, bricks and mortar always seem to prevail.
The Big Shift
The single biggest change coming out of 2020 would have to be the shift in workplace environments. The introduction of covid restrictions meant many businesses had to find new ways to run and thus had to introduce remote workplaces or work from home practices. This was done with the expectation that it would be temporary until everything went back to normal. However, one thing lead to another and with the "norm" seeming a distant memory, it seems we have adapted to a new lifestyle. Studies have shown 84% of people prefer working from home and employers have found a way to save tens of thousands by introducing a remote workplace lifestyle.
Why is this relevant?
When more and more companies start operating out of home, the need to live close to workplaces diminishes. The worry about travelling to work from home is less relevant and the reason to live in a location for convenience of work becomes null and void.
This leads to more people looking at a more luxurious home lifestyle. The mentality that "if I'm going to get locked down at home for an unknown period of time, I want to make sure I'm comfortable". Many of these people are then looking outside the box and exploring options outside of the major employment hubs (major city CBD's) and are spreading to more of a holiday lifestyle locations.
What we are seeing here in QLD is a mass migration of people from Sydney and Melbourne who are looking to live the holiday lifestyle whilst working from home. This is evident in the hottest contested property market ever seen, the tightest rental market and the lack of land or listings. 12 months ago there would have been 30-40 affordable lots of land available on the Gold Coast. Right now, you'll be lucky to find one. Also, most prices have increased by $100k over this period.
On the Sunshine Coast people are literally camping out at new estates the night before new releases to try and put an expression of interest on a block of land that doesn't even register for 12 months.
More people are looking at building as opposed to buying an existing dwelling, because existing houses are being purchased far above the asking price to desperate buyers. Where as when you buy a house and land package the price isn't over-inflated. Generally once you get a block on hold you have a lot of time to do your due diligence and you don't have to worry about other people coming in with a ridiculous offer above your package price. It's a much less stressful process.
Supply & Demand
The governments introduction of a $25,000 home building grant to Aussie's looking at building a new home was a huge boost to the industry during an uncertain period. This boost has been so good that it has since blown out of proportion and sent a shockwave through the construction industry. Australia's tradies are in great demand and in short supply.
A lot of the trades are in such high demand that they are prioritising their services to the highest bidder, this in turn is slowly increasing the cost of construction across Australia. Which is to be expected as the cost of property in general has been rising significantly over the past 6 years but the cost of building houses generally always maintained the same price.
Trades are not only in short supply - the supplies themselves are severely struggling to keep up.
The most well known supply constraint is in the timber industry. The sheer amount of construction happening across Australia combined with a slow down of importation has caused Australia to have a shortage of timber. This has resulted in some of the biggest household builders to walk away from clients. You might say they bit off more than they could chew.
This is where being a medium sized building company comes with it's biggest advantages. Here at Brookmoore we can guarantee our build timeframes as we have pre-booked all of our timelines with our suppliers and our trades to ensure no clients are left behind.
Competitive Market
The hardest part about buying a property in 2021 is the competition you will be facing. When we have the lowest interest rates on record, it's now cheaper to own than rent. This is causing an influx of first home buyers doing anything they can to get their foot into the market. Plus the low interest rates are increasing buyers confidence to spend more money on a home and in-turn hiking up the prices of existing (older) properties.
Record low interest rates, deposits as low as 5%, increased government incentives & the fact that property is proving to be the safest investment in times of uncertainty, this is leading to some of the top reasons why the 2021 property market is one of the most competitive we have seen. There has never been an easier time to get into the property market and it's not looking like slowing down anytime soon.
Should we buy in 2021?
We are seeing a major shift from living in locations convenient for work, to living in comfort. A work from home environment meaning people are willing to invest more time and money in a luxurious home lifestyle. One of the most competitive property markets with buyers camping out and others paying over and above to ensure they get the house of their dreams. A shortage of listings, a shortage of land, a shortage of suppliers and a shortage of trades.
A procrastinator will say that it's better to wait and see what the market does, or to wait for the prices to come down. Often you will find they are the same procrastinators who have been waiting for the market to drop since 2015.
At the end of the day the right time to buy is when you can comfortably afford to do so.
Right now a $500,000 home loan on the average 2.35% interest rate (paying principle & interest) = repayments of $449 per week.
Looking back at historical data all the way back from 1970's, to now, you will see that property values have always steadily increased in price. Yes you will see some peaks and troughs, but in the long run the market is always increasing. Therefore, the earlier you can get your foot in the door, the earlier you can let the market do the work for you. If you bought a house and land package in Coomera (QLD) 12 months ago you would have paid around $450,000. Now you would be lucky to find a package in Coomera under $600,000. That's $150,000 increase in only 12 months. How long would it take you to save $150,000???
Why Build?
Here are some of the obvious reasons why building is better than buying existing:
You can design your dream home and build to your budget
You can take that dream design and build it in any location
You may be eligible for government incentives ($15,000 first home owner grant)
Save thousands on stamp duty as you only pay stamp duty on the land
Greater tax deductions (for investors)
Add the luxuries to the build and save thousands eg. Ducted air, higher ceilings & even pools
On top of that the biggest advantage you will have to building in 2021 is the ease of purchasing compared to buying existing houses. As mentioned above, when buying an existing house you may have 30 people at an open home or even more at Auctions. All competing for price for the same house.
Where as when building through a company like Brookmoore Homes. We take each part of the purchase step by step and ensure you are never rushed or in competition with other buyers. All you need to do is put the package on hold (generally with an expression of interest) at the market price. Then apply for finance. No competitors, no price hiking. Just a fair purchase price.
On top of that, generally you will be buying a brand new house lower than the market value (compared to some of the older houses selling in the area).
So if you are in the position to get into the property market in 2021 and it's comfortable for you to do so. Then don't hesitate, talk to our team and we will do our best to help.
We are here waiting to help you!
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