Is 2021 A Good Year To Buy A House?

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Buying a house is like playing a complicated sport. You need to know the rules, get in shape before hitting the field, and then nimbly maneuver through challenges to win the game.

In 2021, “winning” will require understanding how you stack up against lender qualifications, prepare to compete with other buyers, and navigate a socially distanced homebuying process until vaccines end the pandemic.

The 2020 housing market was plagued by low inventory, rising home prices, and endless bidding wars, making it hard for some would-be homeowners to get their foot in the door. Will 2021 be any different? Or, will it be a good time to buy a house?

If you’ve been eyeing a home purchase but have sat out due to 2020’s competitive market (not to mention the other challenges last year came with), you might be wondering just that.

Though there’s no crystal ball, a clearer picture is starting to emerge of what this year’s housing market may look like.

The 2021 Housing Market: An Overview 

Interest rates plummeted to historic lows last year, and they’ll likely remain low for the next couple of years.

That’s excellent news for borrowers — it means lower monthly mortgage payments and bigger homebuying budgets. However, low rates have also generated more bidding wars and driven home prices up. There are fewer homes on the market, and house hunting has become more competitive. You’ll likely have to move fast when you find your dream home. And you should figure out ahead of time how much over the asking price you’re willing to pay if it comes to that. 

Low-interest rates can help buyers afford more expensive homes. But they also create more competition in the market. The massive move to work-from-home may also have you thinking about a place with enough space to accommodate a home office or spread out a little now that everyone works, studies, and socializes from their living rooms.

Work-from-home policies have given many people the freedom to reconsider where they live, allowing them to relocate to less expensive or otherwise more desirable areas without sacrificing their jobs.  Whatever your reasons for entering the housing market, 2021 could be your year to become a first-time homebuyer. At MJS Construction Group, we have the best dual occupancy selection to make your house a dream come true.

Australian Property Market Forecast 2021

Australian housing prices look to be on a rocketing path even as summer comes to an end. According to newly released housing market data, home prices grew an astonishing 2.1% in February (3% in Sydney).

New data from shows it is home buyers jumping into the market starting in January in droves. First-time buyers are adding to the price pressure.

Commonwealth Bank has forecasted that Australia’s house prices will rise 16% over the next two years in what they’re calling a housing market boom. CB’s head of Australian economics Gareth Aird expects house prices will rise 9% in 2021 and 7% more in 2022.

Is this a House Price Bubble?

While housing markets in the UK, US and Germany are heading into boom periods, the suddenness of Australia’s demand for housing at the end of the regular buying season is remarkable. Several factors are driving the surge, including fear of missing out.

The rise in prices deeply affects housing affordability, as ever-popular Australia is one of the least affordable countries in the world. Sydney, Melbourne, Brisbane, and Adelaide are all ranked in the top ten most expensive cities to live in. Urban fringe housing development limits are being cited for the fast-rising price challenges in these cities.

Is Homeownership The Better Option For You?

More than two-thirds of Australians polled in a recent Finder survey believe that the conditions are right to purchase a home – a level of confidence not seen since the start of the pandemic – and for good reasons.

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A spate of government grants and record-low interest rates have opened opportunities for many potential buyers to get on the property ladder.

However, many experts warn that rushing to purchase a property to access these state-sponsored subsidies may do more harm than good in the long run. Buying a house, much like any substantial financial investment, requires sufficient planning and preparation. Here are some potential benefits and drawbacks of homeownership.


It gives you a sense of security and freedom.

Having your own home gives you a sense of certainty because you know that you will not be evicted as long as you keep meeting your mortgage repayments. You also do not have to worry about rent increases, lease terms, or getting along with your landlord. Another advantage of owning your place is that you have the freedom to make changes and renovations that can add value to your home.

Properties tend to increase in value over time.

The latest figures from CoreLogic revealed that Australian home prices have not only exceeded pre-pandemic levels but reached a “fresh record high,” shattering the previous peak recorded in September 2017. This is the kind of news many homeowners are waiting to hear because a rise in market prices often means an increase in their properties’ value.

However, property values can also drop if the housing market experiences a downturn. When this happens, it is essential to keep calm and bear in mind that homeownership is a long-term investment.

You can build up your equity with each payment.

As you pay your mortgage, the equity on your property also builds up. You can tap into this equity and use it to fund massive personal spendings such as a child’s education, new car, home renovation, or investment property.


It entails heavy financing.

What makes purchasing a home a daunting endeavour for many is the heavy financing typically involved. To understand if homeownership suits your financial situation, you must carefully consider several initial and continuing costs. These include:

Upfront costs
  • Deposit – usually 20% of the property’s value
  • Lenders mortgage insurance (LMI) – if you do not have enough for a 20% deposit
  • Loan establishment fees
  • Stamp duty
  • Connection fees for utilities
  • Legal fees, including solicitor or conveyance fees
Ongoing costs
  • Mortgage repayments
  • Land tax
  • Council rates and body corporate fees
  • Repair and maintenance costs

The value of your property may decrease.

As mentioned earlier, a downturn in the housing market can negatively impact the value of your property.

You Are Buying A Property To Pay Less Tax. 

Don’t be lured into buying secondary properties that offer high depreciation allowances for excessive negative gearing.

These new properties tend to come at a premium price and rarely deliver capital growth for many years.

In my mind, negative gearing is not an investment strategy – it’s for short-term funding strategy, which only makes sense when used to purchase high growth investment excellent properties.

These tend to be established houses, townhouses, or apartments in desirable streets in top locations in the middle ring suburbs of our three big capital cities.

You Are Driven By Fomo – Fear Of Missing Out.

House Model On Top Of Stack Of Money As Growth Of Mortgage Credit, Concept Of Property Management. Investment And Risk Management.

Sure our property markets are moving ahead, and of course, it’s human to become emotional when considering buying a home or an investment property.

But investing emotionally leads to bad investment decisions – it’s precisely this type of emotion, and that makes investors fall prey to property marketers and spruikers who will offer you a way to get rich quickly.

You Want To Get Rich Quickly.

Property investing is a long-term endeavour.

I’ve found it takes the average property investor 30 years to become financially free.

You Don’t Understand How Property Investment Works.

Many people mistakenly believe they understand property investment because they own a house or have lived in one.

So they end up buying a property close to where they want to live, where they want to retire or where they holiday.

Again, these are emotional reasons to purchase a property rather than selecting based on sound investment fundamentals.

On the other hand, successful investors have formulated a sound investment strategy that suits their risk profile and helps them achieve their long-term goals and one which has stood the test of time.

You’re Not Financially Fluent.

I found many investors are looking to invest in property to help increase their cash flow, but if they do not have the financial discipline and cash flow management skills required, taking on the extra debt of an investment property only compounds their problems.

You’re Looking For A Multi-purpose Property.

If you are buying a property intending to create wealth, but it also has to be your future home or a part-time holiday home, or somewhere to retire in the future, then you probably want too much for that one little property to achieve.

Your Finances Are Not For Money Savings.

Property investment is a game of finance with some real estate thrown in the middle.

To get into the property, you should have a stable job, profession, or business with a steady income and need to be attractive to the banks, so they lend you money plus you should have sufficient stashed away in a financial buffer to see you through the inevitable rainy days ahead.

You don’t have enough money (yet!)Suppose you can’t afford an investment-grade property, either because you haven’t saved a sufficient deposit or you can’t service the loan repayments, then rather than buying a secondary property, in my mind. In that case, you should wait and buy an investment-grade property.

You Are Trying To Time The Market Or Find The Next Hotspot.

Sure, property markets move in cycles, and it would be great to buy near the bottom or find a location that will be the next hotspot, but the landscape is littered with investors who tried to time the market and failed.

Instead, the right time to buy real estate is when your finances are in order, and you can purchase an investment-grade property.

Remember, there is no one property market in Australia, so there will always be opportunities somewhere. Looking for home builders? Look no further! MJS Construction Group has you covered

5 Predictions For The Property Market In 2021 

Demand to purchase will remain at elevated levels.

Despite being headlined by the recession, rising unemployment and business closures, interest in residential properties for sale skyrocketed in 2020. 

Household saving has reached levels not seen since the mid-1970s, with many Australians unable to spend money the way they usually would. Borrowing costs have never been lower, and governments are pumping money into the economy in HomeBuilder, first-home buyer incentives and stamp duty relief in some states. All of these factors are encouraging Australians to consider buying property. 

With most stimulus measures to continue into 2021 and interest rates remain low for several years, buyer demand will likely stay near record-high levels in 2021, driving strong demand for property purchases. 

Some rental markets will remain challenging.

Renter-centric, inner-city unit markets have faced tough times during the pandemic, but this is certainly not the case across the board. 

Inner-city apartment rental markets are incredibly reliant on people migrating to a new city, whether that be overseas arrivals for study or work or people arriving from interstate. In 2020, such migration drivers had been broken due to the pandemic, and inner-city apartments have seen significantly reduced demand and subsequent price falls. 

While demand for inner-city apartment rentals has dropped, demand for rentals in outer capital city housing markets and significant regional areas has increased. 

In 2021, inner-city apartment markets are likely to continue to face reduced demand while Australia’s international borders remain closed. Renters can be looking for better or cheaper accommodation when their leases expire, and there will be significant competition amongst landlords to secure tenants. 

First-home buyer activity to fade and investors to return.

Demand from first-home buyers in 2020 has been buoyed by fewer investors, historic low borrowing costs and government incentives. 

As a result, the value of lending to first-home buyers reached a historic high in October 2020 and was 48.6% higher year-on-year. 

Simultaneously, the value of lending to investors has been lower than lending to first-home buyers over recent months. However, this has started to lift recently. 

The federal government’s HomeBuilder scheme has been extended until March 2021, which means first-home buyer activity is likely to remain elevated over the coming months. However, the scheme has pulled forward demand from this segment, which means that there will likely be much less demand from first-home buyers once it is over. 

On the other hand, investor lending has been low. Still, with historic low-interest rates and low returns in most asset classes, residential property investment is likely to become increasingly attractive in 2021. 

The types of properties investors purchase are likely to be far different to the typical stock they have targeted in the past, such as one-bedroom and two-bedroom, inner-city apartments. Investors are more likely to be looking in established and new housing areas and regional markets where demand is lifting. 

Low overseas migration will have repercussions for new housing. 

Demographics have been a driver of demand for housing over recent years. While birth rates have been falling, Australia has continued to see a comparatively high overseas migration rate. 

If someone wants to purchase a property before they become citizens, they will typically have to buy a new home. Given this, a lot of demand for new houses and units is driven by non-citizen purchasers. 

With the international borders shut throughout this year and seemingly well into 2021, this will create challenges for the new housing sector. 

Government stimuli have sought to offset those challenges. However, it has primarily been targeted towards new land or house and land purchases rather than apartments. Stamp duty relief announced as part of Victoria’s state budget boosts the new apartment sector in that state. 

Apartment developers have responded by reducing supply – it was already reduced before this year and increasingly delivered smaller-scale, owner-occupier style developments with significant local amenity. 

The lack of migration to Australia will continue to weigh on the new housing sector. However, state and federal governments will likely continue to provide support measures for these sectors while borders remain closed.  Check out our range of Melbourne home builders for your dream house.

Property prices continue to rise. 

Australia’s housing market has been surprisingly resilient through the recession in 2020. Property prices have been rising over recent months, fuelled by solid demand and low borrowing costs. 

It seems unlikely that these conditions will change in 2021 unless there is an unexpected surge in stock volume listed for sale. 

While stock for sale is likely to rise, it still seems likely that it will not surge to the extent that it removes the upwards pressure on prices. 

Overall, 2021 is shaping up to be a strong year for the housing market, but certain areas will fare better than others. 

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