How Is Real Estate Going To Change In The Future

Despite the challenges posed by the global pandemic, the sudden shift to remote work-from-home setups propelled an increase in demand for the housing market. Consumers have more cash reserves and disposable income at the moment and with the current record-low interest rates, real estate buyers are on the lookout to purchase improved and larger living spaces.

You can guess what this translates to: a sudden skyrocketing of demand for specific types of housing causes supply to drop tremendously. In turn, property prices rise rapidly, and they keep on increasing until now.

What’s Up So Far

Regional Internal Migration on the Rise

The flexibility of remote work and eventually hybrid working setups opens up the possibilities of living in areas where pre-pandemic situations would have seemed impractical. Preference for living spaces with natural environments and great scenery drive many people to shift to reside in regional areas.

The trending regional and interstate migration results in population growth in these areas. As a result, housing prices have been continuously rising, outpacing the city housing market. Compared to capital cities and urban locations, however, regional housing is still more affordable.

This counter-urbanisation movement is nothing new, but the current situations brought about by the pandemic push this trend forward and drive the regional housing market into the spotlight.

Suburban Homes Not in the Market for Too Long

Not only are the housing prices being pushed higher due to the strong buyer demand and decreasing supply, but also the time a property stays on the market has been shortened.

Suburb houses are among those that exhibited the shortest median days on market for the first half of 2021. Properties in Hobart suburbs were being bagged at record-breaking speed, with a median of at most two weeks. PropTrack data showed Queensland to be the most enquired by first-home buyers searching for homes in the suburbs up to September 2021. Suburbs are the next popular areas for buyers looking to move somewhere spacious and still consider commutability to the metro city once the lockdown restrictions are lifted.

First-Home Owners Struggle With Property Price Hike

For a short time, the number of young first-time homeowners buying real estate property increased. Low interest rates made it easier for buyers to apply for loans and for new home lending agreements. That period ended immediately as investors have been attracted to rush back into the market to borrow more shares of new home lending against first-time prospective homebuyers.

We cannot stress it enough: the costs of real estate properties have gone through the roof, and interested first-home buyers are getting priced out of the market. The worsening affordability and decline in first homeowner activity can be observed in lending data, indicating first-time buyers opting for ‘rentvesting’ rather than purchasing expensive dream houses.

What’s Up Ahead

Supply Catches Up, House Prices Peak But Decelerate

With Australia’s economic recovery and lifting of lockdowns gradually pushing through, the high housing prices will remain headstrong but are expected to calm down. Economists and banks are forecasting the housing prices to peak by 2022, then reach a plateau and drop by 2023-2024.

The record-low cash rate will be maintained by the RBA, but the Australian Prudential Regulation Authority (APRA) has recently pushed up the minimum interest rate buffer from 2.5% to 3% for evaluating home loan applications as a move to stabilise the increasing financial risks posed by mortgage lending. Higher borrowing costs and banks’ slowly adjusting their fixed interest rates will make buyers think before purchasing a new property.

Trend Reversals are Expected

Analysts dub it as reaching the ‘twilight of an incredible boom.’ The prices may be slowed down by the growing supply of properties and surge in house listings, mainly in capital cities of Brisbane, followed by Melbourne and Sydney that are gradually lifting their lockdowns. With the return of migrants, workers and students as lockdown restrictions are slowly lifted, properties within the urban areas will experience a surge in population growth. Rent rates are starting to rise, and vacancies across the cities are anticipated to fall.

Property buyers from regional areas will be returning to the cities as living far due to work readjustments will prove to be impractical once more.

Work-From-Home Still to Influence Residence Upgrades

The COVID-induced lifestyle changes have since impacted buyer priorities. Homeowners have become more well-adjusted with the work-from-home setup. With the lingering effect of the lockdown experience, the preference for extra rooms, study and home-office corners, and large garages or backyards will continue as a trend for 2022 and onwards.

With the workforce and nation’s market bouncing back, people are optimistic for opportunities as the Australian economy shows progress. The real estate market is teeming with activity – from the unexpected pandemic-driven shifts and stimuli, encouraging both borrower and consumer confidence, to migrations from the city to regional areas and vice versa. Building hard-to-afford houses for future populations may seem ironic at the moment. The future holds a number of prospects and the housing market has lots of room for changes.