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According to research by RiskWise Property Research from December 2020, property transactions could increase by about a quarter in 2021 after a significant slump through the middle of 2020.
Doron Peleg, CEO of RiskWise Property Research, said: “Although transactions in the established market continued to flow through in modest volumes, through April and May off-the-plan sales were becoming increasingly scarce.”
Mortgage rates fell through 2020, with Reserve Bank of Australia data showing that mortgage interest serviceability at its lowest share of household income since 2002, and below equivalent shares not seen since the late 1980s.
Additionally, the Reserve Bank of Australia cut the cash rate target to 0.10 per cent and lenders were able to access the term funding facility, fuelling competition between lenders amid declining mortgage rates into the fourth quarter of 2020.
“Many lenders are now offering fixed mortgage rates from under 2 per cent for the first time, and responsible lending obligations also finally look set to be rolled back in 2021,” Mr Peleg said.
“We forecast a strong 25 per cent increase in transactions in 2021. As we have previously detailed, it’s now cheaper to buy than to rent for many younger prospective market entrants, and investors will be back in the new year as an unusual opportunity to positively gear investments presents itself.”
Mr Peleg said: “Our market research suggests that there is a significant burst of pent-up demand set to be unleashed as Victoria’s economy has reopened and travel restrictions are eased.”
This growth has also been recently reflected in the volume of newly originated mortgages on residential titles in NSW, which has reached two-year highs on the register, increasing by more than 50 per cent since May 2020.
[Related: Owner-occupier loans propel residential lending]
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