Is the fear of missing out (FOMO) the current driver behind the hot Australian property market in 2021? With open home inspections and rapidly rising housing prices, it would certainly seem as if FOMO has resurfaced. In 2020, buyers were in fear of buying too early (FOBE) mode thanks to a global pandemic. As it appeared that the Australian markets would crash as predicted, attitudes quickly flipped from FOBE to FOMO.
Sydney property market forecast 2021
This sudden change in attitude toward the Sydney property market in 2021 is motivated by pent-up demand, low interest rates, and low-performing assets. Australian property investors and first-time homebuyers are eager to buy more property in 2021, driving up the competition and reducing inventory.
Experienced real estate agents are experiencing feverish bidding that pushes sales prices well beyond vendor expectations. Other signs indicating we are in a strong seller’s market dominated by FOMO include:
- Double-digit increases in open home attendance during the first four weeks of 2021.
- Sydney median house prices reaching a record high of $1.2 million in the fourth quarter of 2020.
- Stronger buyer activity on weekends.
Sydney property market pace
Relentless. Frantic. These are just two of the descriptors used to reference the 2021 Sydney property market. It can make property investors and first-time buyers feel pressured to attend the party. What they often find when they arrive is frenetic bidding that inflates prices. Strong buyer competition is not exclusive to one price segment but rather is widespread. Even in the outer suburbs, where homebuyers normally get more bang for their buck, there is no relief from the excessive pricing pattern.
Complicating matters are low interest rates and relaxed lending practices that have dominated the Australian property market from mid-2020 and into 2021. In November 2020, the Reserve Bank of Australia slashed interest rates to a record low of 0.1 per cent. The deep cuts were intended to help pull Australia out of its recession. House values are expected to jump by 30 per cent over three years if enough borrowers are enticed by the lower rates and more relaxed lending regulations. Early indications support buyers are on board as evidenced by the bidding wars and price inflation.
A look ahead at the Sydney property market in 2021
Demand is expected to continue to outpace inventory as we look ahead at the Sydney property market in 2021. Some of the indicators that lead us to believe it will remain a seller’s market include:
- Auction clearance rates remained strong in the final weeks of 2020 in and around Sydney.
- Consumer confidence is improving, showing consistent gains during the last four months of 2020.
- Lending institutions are keen to write new business, with bank loan deferrals continuing to fall.
Buyers are not the only ones experiencing FOMO in the current real estate atmosphere. Homeowners who are considering selling may wish to get into the game whilst the market is still in their favour.
Looking for help selling your home or renting your investment property? Our team at Belle Property Balmain support homeowners across Balmain, Balmain East, Birchgrove, Rozelle and Lilyfield. Feel free to get in touch for a no-obligation discussion or property appraisal.
