'There is a lot of demand': COVID-induced government policies fuel property prices in Australia

Australian housing prices that are already seeing a "dramatic surge" are tipped to inflate this year further, driven by the government's policy response to the COVID-19 pandemic and record low-interest rates, predict industry insiders.

Mortgage rates likely to remain at record lows well into 2022. Source: Unsplash/Tierra Mallorca

Highlights

• Housing market witnesses a dramatic surge in demand on the back of government policies
• Australia's housing prices are expected to reach record-highs, say industry insiders
• CoreLogic's latest figures show national average property prices are now 1% higher than before the COVID-19 pandemic

According to the Reserve Bank of Australia, the housing market has been more resilient than expected, despite the COVID-induced extended lockdowns last year, prompting experts to predict an upward trend for the sector that is witnessing increased demand. 

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Pratik Shah, a Melbourne-based real estate manager told SBS Punjabi that the real estate market has seen an "unpredictable surge" over the past few months, on the back of the government's HomeBuilder grant and RBA's ultra-low interest rates.

“With household mortgage rates having declined to its historic lows and government’s financial grants and concessions, the first home buyers and the property investors are heading back into the housing markets, keen to get a foothold before property values soar," he said.

Mr Shah added that the sudden land rush has lead to an increase in the housing prices which are likely to inflate further this year.

Source: Supplied by Pratik Shah

These predictions coincide with the data released by property research firm, CoreLogic, as per which housing values continued to rise through the first month of 2021, taking Australian home values to a fresh record high.

The firm said the housing values have surpassed pre-COVID levels by 1 per cent, and the index is 0.7 per cent higher than the previous October 2017 peak.

Source: CoreLogic

'Informed and new-age buyers are venturing into the market'

Perth-based mortgage broker Balpreet Singh Bal said "highly informed and new-age buyers" are now entering the market which has resulted in increased competition in the real estate sector and has further fuelled the demand.

"More qualified buyers are venturing into the market as low rates have certainly increased the borrowing capacity of the prospective buyers,” he said.

“Overall RBA's decision to hold the cash rates was motivated by the aim to instil some momentum and trigger the recovery of the sector and the economy which was witnessing a negative trend."

Source: Supplied by Balpreet Singh Bal

'A lot is riding on the coronavirus situation'

Simarpreet Singh, a lending consultant based in Melbourne warns that a lot is also riding on the virus situation.

"Assuming Australia can retain its control on local transmission of the virus and prevents further lockdowns, house prices are tipped to reach new highs this year. We’ve already seen a surge in Sydney and Melbourne will soon play catch-up," he said.

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