As Property Investors step into 2021 it’s fair to say the common approach will be one of both ‘caution’ and ‘optimism’ in equal portions.
The lessons learned from the past 12 months are destined to have a lasting effect on the way we see the Australian property market. So much so, that I believe we will see growing evidence in 2021 highlighting a massive shift in the way Australians approach property investing.
At the core, investment decisions are based on two things; ‘risk’ versus ‘reward’.
Whilst most investors may never gain the necessary skills to ever truely understand how to access these two elements, our media will always continue to play a major role in influencing the heard mentality of Australian property investors.
For example, headlines that sensationalise strong auction clearance rates typically creates buyer urgency due to a ‘fear of missing out’ rather than providing proof that the suburb provides a good investment opportunity. Less informed investors race to compete for a property, while astute investors move their focus to a different suburb to ensure they can benefit from heard rather than risk getting caught up in an emotional purchase and risk paying too much.
In comparison, another headline could suggest that landlord face a potential ‘vacancy bloodbath’ and are at risk of being left without the ability to secure a tenant to rent their investment property. These sorts of headlines are usually supported by data that can be tracked back to an uncharacteristic oversupply of investment stock (typically high rise apartment buildings marketed by sales groups) in two or three suburbs nationally. Unfortunately novice investors can easily get caught up in these oversupply issues, or remain sitting on the sidelines for years without the confidence to enter the investment market due to witnessing this event. On the other hand, astute investors often find these situations provide ideal windows to target under supplied investment properties at a time when there is far less competition from other investors.
But 2020 has changed everything. The mindsets of all property investors has been deeply impacted by COVID-19 and as a result, their buying habits are changing fast.
A healthy dose of ‘caution’.
When the potential impact of COVID-19 was realised early in 2020, even the most astute investors realised they were without any previous references as to how a pandemic situation would play out. We had faced dramatic global economic storms before, but nothing like this. Most highly experienced property investors braced for what they believed had to result in a 10 – 15% correction the Australian property market.
Perhaps the most surprising thing that came from 2020 was the speed that substantial changes occurred. Sectors within the Australian property market were reporting record low statistics one month, and then just a couple of months later, recording record high statistics. Government stimulus announcements were delivered quickly, but the reactions by Australian home buyers, down-sizers, builders and land developers were ever quicker. One day the building industry was contemplating ‘Armageddon’, the next day alarm bells are ringing as land developers and builders were swamped with buyers and reports surfaced highlighting severe undersupply issues fast approaching.
Office buildings, once a hive of activity, now had entire floors vacant and companies were announcing that they were not intending to move back in. This ‘lock down’ period forcing employees to work from home proved to be the final straw for thousands of families living in small houses and appartments, and the vast acceptance of a new remote workforce triggered the start of an exodus from our biggest cities. Regional lifestyle cities once overlooked by property investors were now the most hottest postcodes in Australia. Regional properties were being purchased ‘sight unseen’. Rental properties in these markets were now being treated ‘like gold’. Rents were rising, regional economies were booming, and an ability to move your family to the country was quickly becoming the envy of others.
Everything was changing, and it was changing fast!
Astute investors now have a new perspective on what’s possible, and how quickly change can happen.
A massive injection of ‘optimism’.
Property has long been the favourite investment choice by Australians. The ‘bricks and mortar’ security of real estate is something engrained in our culture and the Australian Government has a keen interest in maintaining this belief. The decision by our Government not to provide housing, instead choosing to incentivise private investors to fund and supply homes for those not in a position to own a home, has opened the door to what are now amongst the best (if not the best) property investment tax incentives in the world.
The impact a pandemic would have on our housing market must have been as nerve racking for the Federal Government as it was for Australian home owners. Of course thanks to stimulus packages and our national performance to contain the spread of the virus, the Australian property market is now every bit as strong as it was prior to the coronavirus making its way to our shores.
The resilience of our property market, and the overall confidence of Australian consumers, is now fuelling record levels of optimism.
Recent surveys have highlighted that as many as 26% of Australian adults are eager to purchase an investment property in 2021. Even more interesting is the trend towards remote investing, where surveys have revealed that over 93% of investors plan to purchase their next investment property outside of their local area.
Yes, the way property investors see the Australian property markets has changed quickly, and the way Australian’s invest in property has changed forever.
Learn where I’ll be investing in 2021
If you’re planning to purchase an investment property in 2021 and would like to know what locations I’m targeting, please join me for an online presentations I will be hosting on Wed Jan 27th. I’ll be revealing a few of the regional hotspots, along with why I’ve selected these markets, what I’ll be purchasing, and why. Please feel free to ask questions and if I don’t have time to reply during the webinar, I’ll reply ASAP.
Please note that our system can only accommodate 200 people online so please register to avoid disappointment.