If you put your homeownership dreams aside in 2020 due to the COVID-19 pandemic, you might want to consider home buying 2021. Unsurprisingly, COVID-19 affected the real estate industry in 2020 in many ways, becoming the catalyst behind a record-breaking year in the Queensland property market. Most importantly, the demand for homes in Queensland for owner-occupiers (specifically first time buyers) is greater than supply, so it is important to understand how and why the market is thriving in these dire conditions.
Government Grants and Industry Influences
Although it may appear surprising due to the global pandemic, 2020 was the year of first home buyers. It was discovered that the key drivers and motivations for first time buyers were record low interest rates, Government Grants and a buyer’s drive for better standards of living.
The latest figures from broking firm, Mortgage Choice, showed that 25 per cent of loan applications lodged by brokers were for first home buyers, compared to a historical average of approximately 12 to 13 per cent of loans going to first home buyers. Typical home loan enquiries were more than 60 per cent higher than in 2019 due to a strong interest from first home buyers looking to take advantage of Government Initiatives.
The success following the introduction of the Australian Federal Government Initiative – the HomeBuilder Grant in 2020, saw tremendous growth in the new home construction market. As of February 2021, the HomeBuilder Grant had received over 82,000 applications, creating a pipeline of work for the nation’s tradies, valued at a staggering $18 Billion.
Designed to support the growth of the residential construction market by encouraging the commencement of new home builds and renovations, the HomeBuilder Grant offered owner-occupiers and renovators $15,000 for building contracts signed between 1 January 2021 to 31 March 2021. The HomeBuilder Grant amount was initially $25,000 but was reduced and extended to support builders process their backlogged applications.
The popularity of the HomeBuilder Grant has influenced the biggest surge of building approvals since records began almost 40 years ago. Building approvals in Queensland alone saw a spike of 51.2 per cent in the December quarter in 2020, compared to the same period pre-pandemic in 2019.
The changes endeavoured by the property market in response to low interest rates and extensions of Government Grants, has caused a lack of dwelling supply.
The undersupply of homes has caused first home buyers to search for a home in regional suburbs that suits the needs of their COVID-19 adapted lifestyles.
The impacts of COVID-19 have caused regional housing values to increase as more people begin to find comfort in the country. Australia’s Regional housing market has recorded a rise in dwelling values of 7.9 per cent over 2020, compared to just 1.7 per cent across capital cities.
The desire for a bigger backyard and more relaxed pace of living was a conclusion most owner-occupiers came due to the COVID-19 lockdowns, which are still continuing to impact the lives of every Australian.
The steady influence of low interest rates and Government Initiatives, paired with the undersupply of available properties in Brisbane’s property market, is encouraging buyer activity.
COVID-19 has created prime conditions for many young people to comfortably enter the property market, as Real Estate Institute of Australia figures show first-home buyers make up a greater percentage of property owners than they have since 2009.
The lack of new opportunities to buy is sparking FOMO (fear of missing out) amongst buyers, encouraging future first home buyers to consider buying new and most importantly, to buy now.
According to a recent article in REA, the most popular suburbs among first home buyers in Queensland, based on email enquiries, come from the Gold Coast and Greater Brisbane.
Within the Ipswich regions, suburbs of the 4305 postcode are continually proving their popularity due to their affordability and proximity to the Brisbane CBD. Homebuyers that are buying their first home in Ipswich are also reaping the benefits of first-time buyer Government Initiatives such as the $15,000 First Home Owners’ Grant, the $15,000 HomeBuilder Grant and the First Home Loan Deposit Scheme.
The First Home Owners’ Grant isn’t the only Government Initiative being snapped up by eager first time buyers. According to the First Home Loan Deposit Scheme Trends and Insights report, released by the National Housing Finance and Investment Corporation (NHFIC), Ipswich came second Toowoomba with the highest number of applications for the Scheme.
The desire for the 4305 postcode demonstrates how buyers are eager to look to outer suburban areas to purchase their first home. Regional areas are well represented as less-crowded locations of affordability. The latest insights from the NHFIC revealed that first home buyers appeared willing to compromise on location in order to secure a Government-backed deposit for their first home. Many buyers are more willing to move further than initially planned to secure a bargain and save money. This sacrifice encourages the idea that first home buyers are making significant changes to their current lifestyles to accommodate for a secured future in areas of growth.
Although first home buyers have been dominating property sales in 2020-21, the continuous growth of markets such as Brisbane, are gaining the interest of interstate investors.
With first home buyers and owner-occupiers dominating the market, the quiet pick up in investor activity is going largely unnoticed. The most recent home-lending data has revealed that in October 2020 there was $5.3 billion in new lending to investors. The investor market undeniably took a hit during the lockdown periods of 2020, but were temporarily supported by mortgage freezing and Government Initiatives keeping tenants afloat.
A shortage of rental properties, low vacancy rates and a rising demand for regional areas are proof that Australia’s rental market is yet to see the impacts of COVID-19. With median property values increasing, experts predict that Australia could soon experience the biggest rent increases in history.
For first home buyers and investors alike, this represents an extremely exciting opportunity to reap the benefits of this unprecedented growth. The month-long lockdowns in states such as New South Wales and Victoria, are driving consumer interest for space and a better quality of life in Queensland.
Brisbane gained the most interstate residents than any other capital over the June quarter in 2020 due to its climate and containment of the virus.
Although many investor enquiries are dominated by demand for capital city living, there has been a shift of focus to the outer suburbs and regional areas of which are experiencing rapid growth thanks to first home buyer activity.
The most important sectors investors should watch out for in 2021 are affordable housing, regional lifestyle towns, detached housing and South-East Queensland.
As the demand is greater than supply for properties in Queensland, it’s ideal to make your move into the property market in 2021 so you can capitalise on the inevitable property growth.
Whether you are a first-time buyer and have no knowledge of property or a sophisticated investor looking to add a dual occupancy home to your property portfolio, QPG is only one call away! Please contact us on 1300 248 514 or [email protected] to make your move.