Five Factors to Monitor in 2021 as Property Market Begins to Fire

Strong land sales results in early 2021, record low interest rates, a rebounding economy and strength in the broader residential property market have built a case for cautious optimism in the Australian property market, particularly for new home buyers in growth corridors in Victoria and Queensland.

While last year’s land market was supported in part by government stimulus, promotions and incentives, I anticipate 2021 will see a return to a focus on more fundamental issues.

At Oliver Hume we track multiple data points to help us understand the market - not just where we have come from, but where the market is headed.

Here are five market factors we’ll be keeping a close eye on this year and why they matter.

1.      Enquiries and Reservations

The volume of enquires and reservations is a key sign of a robust land sales market.

It’s an area we’ll be watching to see whether it sustains itself but right now the signs are positive with January and February proving strong for enquiries and reservations alike.

In our most recent monthly dashboard highlighting key trends for the Victorian market, new enquiries in January were up strongly to kickstart the year. While new enquires eased in February slightly, reservations in the month saw a strong increase.

The volume of transactions has experienced growth for the past few months pointing to confidence in the broader land sales market.

2.      Time to Purchase

New project launches and stage releases have been a feature of 2021 so far and buyers have been making quicker decisions in February as they rush to take advantage of them.

The numbers speak for themselves. From enquiry to purchase, around a quarter of sales happened within seven days.

The eight to 21-day category from enquiry to purchase accounted for around 35% of sales.

That means over 60% of all buyers took less than a month to make the purchase call in February.

Clearly the right products were at the right price and sales followed suit.

This decisiveness all points to an increasingly buoyant market. 

It will be interesting to see to what extent these results continue in the months ahead, but these are promising signs for newly launched and upcoming projects.

 3.      Buyer by Type

Lending and other data has been hinting that investors may be playing a bigger role in 2021.

In February, we saw another indication that land investors were returning as this segment increased their market share from around 12% to more than 15%.

The next few months will reveal how much of a role the investment segment will play in the market overall in 2021. This is especially of interest given that renewed investor activity can be a sign of a more robust market.

 4.      Lot Size and Purchase Price

There will be a fine balancing act between land size and price in the next few months.

While HomeBuilder allowed some buyers to move up a bracket in terms of land sizes affordability pressures, especially important given households are still trying to navigate the challenges of the pandemic, it means that smaller lots remain very popular.

Lots in the range of 400-450 sqm dominated sales in February.

The 350-400 sqm range represented the second largest group.

 5.      The HomeBuilder Effect

The end of the Homebuilder program will provide greater clarity of the market’s underlying strength.

Although HomeBuilder has had a significant impact, our data suggests that many buyers are looking beyond this stimulus measure and continuing to purchase lots that will not benefit from the program.

Given the range of other policies designed to assist homebuyers, this suggests that the tailwinds driving market activity will be with us for the short to medium term at least.

Over the longer-term, the re-opening of borders and the resumption of Australia’s immigration program bodes well for the residential and broader property market.