Real Estate Economic Predictions for 2021 from Alan Oster

By Janet Spencer

Last week I listened to real estate economic predictions from 2021 from Alan Oster. An informative online update hosted by Anthony Webb from well-known Melbourne real estate firm Philip Webb and Alan Oster from National Australia Bank (NAB). It was very interesting to hear from Alan about where the economy is currently positioned and what drivers and expectations he has researched for next year.

real-estate-economic-predictions-for-2021-alan-oster

Here are some figures that Alan shared with attendees this week. (Data source not specified but based on comprehensive research done for NAB)

Unemployment

Unemployment is expected to hit 9.2% by year end, 10% by early 2021, 8% by end of 2021 and 6.8% by 2022.  The NAB considers anything 8% or above a critical tipping point for unemployment levels in Australia.

Gross Domestic Product

Gross Domestic Product (GDP) in Australia is down -4.7% and in Victoria by -15%

Interest Rates

Alan predicts that rates will be stable until at least 2025 and at historical lows for owner occupied and business loans.

House Prices

Consistent with many other experts, Alan believes house prices in Melbourne will fall between 10 and 15% due to the pandemic, shut-downs and buyer and seller sentiment.  This is not the disaster predicted early in 2020 when the press were speaking about 30 to 50% falls in property values. Alan estimates the market has already fallen 10% on prices year on year from September 2019.

Commercial Property

He also noted that commercial property is in major trouble due to businesses struggling. The most viable sector currently being industrial property supporting wholesale and online businesses who are open and thriving.  Alan further commented and I think people would be aware that office and retail and hospitality properties are “Zombie Businesses” propped up by Job Keeper or doing it really tough. He expects closures and defaults to commence shortly.

Regional Property

Alan believes all regional towns with strong internet will grow in popularity and property prices could go up in areas like Ballarat, Bendigo and seaside locations. Working from home is going to be the “new normal” for many and indeed until an effective vaccine is found for COVID-19.In closing, I thought the update was very concise and indicative of what we can expect going forward.

Property Influences

1. Interest rates – stable for next few years.
2. Population Growth – he expects will halve to 0.7%
3. Unemployment – as previously mentioned the bank is very nervous about lending and default potential if unemployment is over 8%.  Encouragingly national unemployment dropped in August but there is no doubt in Melbourne its potentially going to worsen.

Stimulants to the Property Market and Economy

The private sector is in generally bad shape and the public sector in reasonable shape.  So, what can be done to help?

Options include:-

– bringing forward tax cuts.

– build more public housing,

– Build more roads and infrastructure and all major projects

And deferring any construction of new airports

And reducing “red tape” to fast track these stimulus measures.

Alan is very keen to see what the budget entails in Victoria due for release on the 6^th of October, 2020

Planning to buy real estate in coming months?

I caution buyers that there are numerous different types of residential property and each type of property and suburb or locale is unique and requires research specific to what you want to buy right now. 

The apartment market in inner Melbourne is the worst affected residential sector with very high vacancy rates and rents and values falling.

Pre- purchase research should be more thorough now than every before and every safety measure built into your property purchase.

Of course, our expert Buyers Agents in Melbourne at Buyer Solutions are here to help. 

For independent advice on buying or selling real estate, contact Janet Spencer at Buyer Solutions +61 3 9816 8555 or email jspencer@buyersolutions.com.au

Buyers Advocate, Buyers Agent, Buying property, First home buyers, Housing Affordability, Housing Market, Investment property, State of the market

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