Hot list: Australia's top 10 areas tipped for property growth in 2021

Date: 2021-06-02 05:56:58

Hot list: Australia's top 10 areas tipped for property growth in 2021

Whether you’re a first home buyer looking to make the most of government incentives to purchase your starter home, or a seasoned investor ready to jump in, finding out which areas are tipped to boom could help you navigate your property purchase decisions in 2021. After all, it could be a year like no other.

Canal front Pelican Waters, Caloundra Sunshine Coast The Sunshine Coast was named among the top picks for property price growth in 2021. Image source: Gekko Gallery, Shutterstock.

Real estate forecasters at Hotspotting have revealed their top 10 places to consider buying property around Australia in 2021 and beyond, with long-term capital gains expected in each location.

Managing director and property analyst Terry Ryder says this year is shaping up to be a strong one for the performance of the property market. He predicts buyers could be in for even more intense competition at sales than last year as investors re-enter the market, and national house prices could inflate by more than 10% on average.

In this story:

  • What’s in store for the property market?

  • What hurdles can property buyers expect?

  • What makes a property market boom?

  • What are the top 10 property hotspots in Australia?

WHAT’S IN STORE FOR THE PROPERTY MARKET IN 2021?

THE EXODUS TO LIVING AN AFFORDABLE LIFESTYLE, AWAY FROM THE CITY

Mr Ryder, who is also the founder of Hotspotting, thinks 2021 is shaping up to be a strong year for the property market after the COVID-19 pandemic has exacerbated a trend that was already underway in Australia – the exodus to living an affordable lifestyle.

“It’s a trend that’s been percolating away steadily for the last two or three years, but certainly picked up pace in the year of the pandemic, because of the lockdowns which alerted more people to the possibilities of working remotely and being able to access a different lifestyle more affordably, away from the big, expensive, congested cities,” Mr Ryder told Canstar.

“You could say that what was a steady trickle has turned into something more like a stampede as a consequence of the pandemic lockdowns.”

Data shows the extent to which regional Australia outperformed the combined capital cities market last year. Property research house CoreLogic found eight of the 10 suburbs that had the largest growth in house values in 2020 were regional locations, with Tasmania and Queensland dominating that list.

NATIONAL HOUSE PRICES GROWTH IN THE DOUBLE-DIGITS

Mr Ryder also expects we could see national average price growth in the double-digits, possibly “above 10% in some locations, and others well above that”. He said this would be at least partly due to the “ultra-low” vacancy rates in most parts of Australia, with the exceptions of inner Sydney and inner Melbourne.

“We have people who are looking for rentals and need to find somewhere to live, but they just can’t because there are so few available, and when something becomes available there are literally queues of 30, 40 or 50 people competing for the same rental property,” he said.

“Vacancies are that low, rental prices will be rising and when rental markets are strong, house prices will follow.”

INVESTORS TO RE-ENTER THE MARKET

“It’s strange that investors have been so reluctant to get into the market because it’s a fantastic time to be an investment property owner, to be a landlord,” Mr Ryder said. “Everything’s in their favour in most, if not all, locations across Australia.”

Mr Ryder noted that although many experts had predicted 2020 would see a major negative impact on the Australian property market due to the pandemic, it turned out to be remarkably resilient as people “retreated to the solidity of bricks and mortar” during times of uncertainty. First home buyers in particular came out in droves, taking advantage of record-low mortgage interest rates and numerous home-buying incentives from the government, such as the First Home Loan Deposit Scheme and HomeBuilder grants. By comparison, investor numbers were comparatively subdued.

But as for this year, first home buyers might have a bit more competition to handle, with Mr Ryder expecting to see investors re-enter the market.

“I think we’re going to see investors a lot more prominent in 2021,” he predicted. “They tend to be reactive, follow the market trends rather than lead them. I think they’re going to be out in force this year, and that’s going to make some of the better markets even more intense in terms of competition.”

He said the lack of investors in 2020 had been one of the advantages for first-time buyers.

“They received the highest amount ever of government assistance for first-time buyers, the lowest-ever interest rates and the absence of investors as competitors – but this year that factor is going to change,” he said.

WHAT HURDLES CAN PROPERTY BUYERS EXPECT IN 2021?

Mr Ryder expects intensity of competition and fast sales could be some of the biggest hurdles property buyers face in 2021. With that possibility comes a few words of caution from the property analyst.

“People spending a large sum of money on real estate want to buy with proper due diligence,” he said. “They want to be careful. They want to check things out. When markets are really hot and properties are selling quickly, it’s harder to do that.”

WHAT MAKES A PROPERTY MARKET BOOM?

Mr Ryder said that spending on infrastructure – particularly transport, hospitals and universities – was the number one biggest factor that contributed to a property market’s growth.

“What we know to be true is that nothing pumps up residential property markets as strongly as major infrastructure spending,” he said.

Infrastructure building_Property hotspotsHotspotting founder Terry Ryder says spending on infrastructure is a key contributor to property price growth. Image source: Michael Leslie (Shutterstock).

The development of shopping facilities like Coles and Woolworths can also have an impact on a property market’s prospects, he said, but not as much as large infrastructure spending, including on the development of motorways, rail links, tunnels and bridges.

When picking out the top property hotspots for 2021 (see below), Mr Ryder said he and his company’s analysts looked for areas that had the best prospects for uplift based on what was happening in their local economies.

Infrastructure spending is a key part of that, but so is how the local economy fits with the prevailing trends that are dominant in Australian real estate at the moment – one of which is the movement to regional areas for a more affordable lifestyle.

TOP 10 PROPERTY HOTSPOTS IN AUSTRALIA

These are the 10 best locations in Australia for property investors seeking capital growth in their next investment in 2021 and beyond, according to Hotspotting:

  1. Sunshine Coast, Queensland

  2. Bendigo, Victoria

  3. Rockingham, Western Australia

  4. Central Coast, New South Wales

  5. Toowoomba, Queensland

  6. Blacktown, New South Wales

  7. Marion, South Australia

  8. Orange, New South Wales

  9. Moreton Bay Region, Queensland

  10. Monash, Victoria

Infographic Top 10 Property Hotspots Australia 2021

For more information about why each area is tipped for growth this year and in 2021 and what type of buyer they may be suited to, according to Hotspotting, see below.

 

7. CITY OF MARION, SA

Marion Flinders Uni_Property hotspotsFlinders University is based in Marion and scheduled for an upgrade to its educational facilities. Source: ArliftAtoz2205 (Shutterstock).

  • Located: About 8-20km south and south-west of Adelaide CBD.

  • Strong performers: Mitchell Park and Clovelly Park are ideally located close to the university and Westfield shopping facilities. Plympton and Trott Park have seen average annual growth in median house prices around 3% over the past 10 years. Hallett Cove has the highest turnover of dwellings in the last 12 months, at 183 sales.

  • Property profile: Marion has value-for-money appeal and is close to key infrastructure, including the Tonsley innovation centre and the Flinders university-medical precinct. Many suburbs have median house prices in the $400,000s and have seen annual growth in median house prices generally around 2% per year over the past 10 years. The median house price in Marion is now around $520,000.

  • Local economy: The workforce is made up of many young and professional people. The city’s economy is built around a future in modern technology, health and education.

  • Projects boosting capital growth prospects include: The regeneration of the Tonsley precinct to be an innovation district (the Tesla group’s first Australian battery and electric cars service centre is located here, as well as Flinders University and TAFE campuses), major transport projects including an extension of the Tonsley rail line to Flinders Medical Centre, and the Glenthorne National Park development.

https://www.canstar.com.au/home-loans/top-property-growth-locations/

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