Why selling the family home makes more sense now than ever
Current economic conditions in Australia favour those looking to sell property – but this “perfect storm” may not last for long.
After a tough 12 months for the Australian economy, recent data has revealed a surprising trend: houses are steadily gaining value right across the country.
According to CoreLogic, prices have been rising since October. In November alone, the national house price rose 0.8 percent, buoyed by significant gains in the smaller capital cities.
Both Sydney and Melbourne showed decent November growth at 0.4 percent and 0.7 percent respectively.
And analysts expect the nationwide price growth to continue in 2021. CoreLogic’s Head of Residential Research, Eliza Owen, told the ABC that a combination of low-interest rates, improved consumer sentiment and ongoing coronavirus stimulus measures would fuel further rises.
Kate Melrose, Ingenia’s General Manager of Project Sales, calls current conditions “the perfect storm” for those wishing to cash out of the family home.
“The low-interest rates really are underpinning the property sector and encouraging people to buy at the moment,” she says. “Auction clearance rates are almost back at pre-COVID levels, and we’re seeing really solid price escalation.”
But Melrose warns the mid-term outlook is much less certain. “Australia has been incredibly resilient: we’ve stepped out of recession and unemployment’s been OK. But what’s going to happen when government programs such as JobKeeper wrap up in 2021? How will that affect unemployment and people’s willingness to take on debt?”
What’s more, many of those facing unemployment may need financial support from their retirement-aged parents. “Older Australians who cash out of the family home now will be in a better position to help their kids if and when it’s needed or be ready to enjoy travel again when a vaccine makes it possible,” notes Melrose.
Additionally, Melrose points out that Australia’s high per-capita immigration rate has traditionally been supportive of property prices. “But immigration has all but ceased as a result of COVID. The implications of that don’t seem to have flowed through to the housing market yet, but we’re expecting them to in 2021.”
We have experienced lower volumes of homes on the market and record-high enquiry levels, which has been very encouraging for downsizers. Those who have been deferring their decision to downsize are now looking to take control of their financial future by capitalising on the unprecedented market activity.
What’s more, after the social isolation many felt during COVID, more and more people are seeking a community with like-minded neighbours where they can do as much or as little as they choose.
And those who subsequently choose to move into an over 55s community living under the land-lease model, such as an Ingenia community, can keep more of that money in the bank.
That’s because Ingenia Lifestyle residents own their houses, but rent the land on which they sit. As a result, the initial purchase price is much lower than in comparable homes elsewhere. And many residents can access government rental assistance to offset the cost of renting the land.
“There’s a mental freedom that comes from having more money in the bank,” says Melrose. “In times like these, having that sort of financial flexibility is incredibly valuable.”
Put yourself first in 2021!
2020 redefined how we live, prompting many people to reconsider what’s really important. While we all have different dreams and aspirations, there are a few values we all have in common – that’s the importance of community, finances and lifestyle.