2020 was certainly a rollercoaster year on the property market. Multiple and extended lockdowns in Melbourne made it tough for both buyers and sellers to proceed with plans for the year. Once restrictions eased, the market began to strongly rebound with REIV reporting a 9.5% increase in house prices for the December quarter in Metro Melbourne (2.5% for units). So will this trend continue in 2021? Time will soon tell, but we’ve done some research into the latest insights from property experts who believe there is a number of factors driving continued price growth this year.

Shortage of stock across Melbourne metro & regional Victoria
Property experts agree that we currently have too many buyers and not enough properties hitting the market at the moment. REIA president Adrian Kelly said, “The housing market is ready to be put to the test in 2021, with further price increases expected on the back of limited stock and strong buyer demand”.   Fear of missing out (FOMO) is also front of mind with many buyers, which may prompt some to act fast to secure a property early in the year.

An exception to this stock shortage is the post-covid Melbourne CBD, where the buyer-property ratio is more balanced. This is partly due to international migration being on hold.

Boom in regional property continues
The flipside to the move away from metropolitan Melbourne is the continued flood of city-dwellers looking to secure properties in regional areas. Core Logic data shows that house prices in regional Australia have risen at a higher annual rate than in Australian capital cities for the first time since 2004.

The growing acceptance of remote work as a viable long-term option for many workers (not just during the pandemic) is likely to continue to drive regional property demand this year.

Opportunity for first-home buyers
Low interest rates and government incentives have created a great motivation for first-home buyers to enter the market. Property Council of Australia Victorian interim executive director Matthew Kandelaars calculated that government grants and stamp duty savings worth up to $42,500 are available to first-home buyers in Melbourne if they build a new house. It is important for eligible buyers to act soon whilst these incentives are available, as they potentially represent years of savings. For some this will be a worthy consideration.

From our point of view, the future looks bright for the Melbourne property market in 2021! So long as the Victorian government can continue to keep COVID-19 outbreaks under control, market confidence should continue to rise. If you are considering selling we would be happy to provide advice and recommendations.