Who would’ve thought that by March 2021 I’d be sitting here encouraging investors to get into the market as soon as possible? Prices are moving daily. Demand is so high developers are asking for stock back as retail enquiry is outpacing supply.
Well I am glad to say we told you so!
In April 2020, we hosted our first virtual event after being forced into lockdown. Our CEO, Tony told investors not to panic, that the market would bounce back, and they’d soon see an uplift in demand which will lead to an uplift of pricing. I was watching the event from my makeshift home office. Some of the comments from the 400-plus viewers came from sceptics who thought Tony was dreaming, with some even questioning his integrity as a property expert. To be fair, they had every right to question. We were at the start of a global pandemic. We knew it was going to lead to unemployment, as well as some tenants being unable to pay the rent—leading to empty investment properties.
Truth is, we’ve seen a lot of this in Australia before. As we began to recover from the ‘recession we had to have’ in the early 90’s, the unemployment rate was at a record high. The rental market was plagued with vacancies and the federal government was accumulating debt with budget blowouts and structural reform to help boost the economy. After the recession we had to have, the property market kept increasing in value with median house prices increasing year in year out
Fast forward to today where we find ourselves in a situation of the highest auction clearance rates in memory across the nation, as well as demand for the established market outweighing that of supply. It is now common to see properties selling in the hundreds of thousands above the vendor’s reserve price. I have been watching the established home market very closely since the recommencements of public auctions post-lockdown. The number of registered bidders has been the most interesting. At most auctions I have attended, there have been a minimum of 15 registrations and at least seven active bidders. Consequentially, the 20-to-30 percent downturn from some property forecasters in 2020 has been revised to a 30 percent uplift over the next couple of years. With the RBA asserting they’ll keep to their record low cash rate in the coming years, demand is going to remain high at the risk of FOMO (fear of missing out). My advice to investors is to get in early because it’s not going to get cheaper.
I can honestly say in just under 20 years of property industry experience I have never had the luxury of assessing more projects in a 12-month period as I do now. On average we are being brought eight projects a week and assessing at least four which are in our approved markets. Those who have been in and around our business over the last 24 months have seen the immediate uplift in pricing once the developer has finished off their presales and commenced construction. We saw this in particular with projects of ours in Maroochydore and Alphington. Developers are telling me every day that they are seeing record number enquiries through the display suite and those clients are not getting the incentives we are negotiating on behalf of our clients.
Book in your clients for our March 16 launch of a project that many of you are either in or have clients in. It includes amenities never seen before in a residential area and a suburb that has increased by $100,000 since we approved stage 1 and negotiated pricing for stage 2 that is very similar. Don’t leave it until it’s too late.