Pro-active lessons to be learnt from the year that was
The year 2021 was defined by market highs and pandemic lows, record rises and construction woes. Incongruously, this combination ultimately proved a boon for property values.
However, in the quest for lockdown-free lifestyles, COVID-19 continued the landmark exodus away from major capitals to regional centres and smaller cities in sunnier climes.
This, in turn, raised regional house prices to record levels, but also saw a gross undersupply of stock sparking the FOMO (fear of missing out) phenomenon.
Countering these buyer challenges was the spectre of TINA (there is no alternative). As with any sound investment, these findings need to be tempered by a solid savings plan and a healthy credit rating.
The post-pandemic effects also reshaped the commercial sector, introduced measures and legislation that seemingly favoured tenants (renters) and challenged landlords (rental providers), and realigned consumer spending behaviour.
Whether you are an owner-occupier, investor, renter or potential home buyer, we uncover the financial lessons to be learnt from what proved to be a tumultuous but potentially profitable year.
Residential market
Major trends: regional exodus; housing undersupply; surging property values; and record-low interest rates inspire borrowing and prompt a raft of lending options, including the ubiquitous bank of mum and dad, guarantor support and the emergence of so-called instant loans, to be approached with extreme caution. Equally so is avoiding costly errors of overborrowing while ensuring you are fully covered for mortgage insurance.
Commercial sector
COVID lessons: streamlining of the commercial sector due to the effects of the pandemic; ‘work from anywhere’ ethos creates demand for employer flexibility, government assistance and advanced technology; shift from commercial zones away from CBDs to regional centres.
In both commercial and residential sectors, the increasing prevalence of buying online and virtual-reality sales tools are proving to set trends in real estate marketing. However, there is no substitute for qualified and personalised service.
Construction challenges
With the national repair bill to the sector in the billions, industry specialists highlighted a need for greater reform and government intervention.
Analysts recognise that national housing shortages exacerbated by the pandemic, rising labour and shipping costs remain the major challenges.
Close consultation with workers at a regulatory level holds the key to reconstructing this long-beleaguered industry.
Rental provider-renter amendments
If managed responsibly, the built-to-rent big picture proves a winner for renters, rental providers and developers. Keep an eye out for any changes to state-based tenancy laws; government-initiated rent assistance in the face of COVID restrictions played a big part in due diligence for landlord (rental provider) rights and obligations; and the importance of honesty and shared responsibility regarding pets in strata.
Consumer behaviour
The main findings: necessity spending; widespread focus on what buyers need rather than want; and a cautious approach to spending.
2021 had a focus on family values and quality over quantity; a trend that is set to continue into the New Year.