Residential and industrial property market forecasts prove resilient going into 2021. On the other hand, commercial properties and CBD office-based prospects remain less favourable.
Let’s take a look at what else real estate companies are forecasting for 2021.
Trends in the residential property market
SQM Research has broken down forecasted dwelling prices across Australia’s capital cities, averaging an increase of 5.0% to 9.0% throughout 2021. The real estate statistics organisation places Perth on the higher side of the spectrum, with an increase in dwelling prices forecasted between 8.0% to 12.0%. However, some of the lowest increase percentages aren’t far behind, with Adelaide seeing a 6% - 10% fluctuation throughout the year. SQM attributes this mainly due to the upcoming changes in lending laws and improved consumer confidence.
CoreLogic bases its forecast off the end of 2020; “Our national house price index recorded its second consecutive monthly rise during November, with dwelling values up 0.8%” says their Head of Research, Tim Lawless. Tim states that if this growth trend continues, their national home value index might even surpass pre-COVID levels.
Overall, forecasts and reports from the big four banks look positive and uniform for expected housing prices in 2021. The highest forecast goes to Westpac, with an increase of 7.5%, followed by ANZ and CBA, with an increase of 9.0%, and NAB anticipating a rise of 5%. CBA’s Matt Comyn accurately sums up the Big 4 Banks reasoning behind these figures, attributing them to “... low-interest rates, stimulus measures and Australia’s successful weathering.”
Trends in the industrial property market
The industrial market follows suit with similar positive forecasts as residential. In fact, the overall growth of eCommerce amid the pandemic, largely supported by the business drive to keep operating, means industrial properties are in for a record year of leasing demands.
Trends in the commercial property market
On the flipside, with companies having to shut down, close or put on hold centralised office spaces due to compulsory lockdowns and remote working cost efficiencies, the forecasts for commercial properties are divided in 2021.
NAB’s Q3 2020 survey highlighted Sydney and Melbourne as the hardest hit by COVID-19, mainly due to lockdowns, with vacancy rates increasing by 12% in Sydney and property appraised forecasting an increase of 10% going into 2023. NAB’s survey also found office rents and capital values are expected to fall 3.7% through to Q3 2021.
On a more positive note, Charter Hall, a multinational property investment and fund management company, showcases rising commercial property confidence for 2021. Their Chief Executive, David Harrison, states that the combination of very low-interest rates will drive investor capital toward property, yielding two to three times the yield available from buying residential property.
How can your agency adapt in response to these trends?
In tough economic times, it takes innovation and a willingness to change how things are done to survive. Outsourcing is one option available to real estate agencies, that if done well, can assist in improving efficiencies and increasing margins.
In 2018, Rockend surveyed its customers, with approximately 50% of agencies recognising outsourcing as an opportunity. The other 50% was either unsure about the benefits of outsourcing or viewed it as a challenge.
Those agencies with the view that outsourcing is an opportunity are already ahead of 50% of their competitors in managing through the next few years. Arguably, those agencies have strong leadership and a willingness to improve the way things are done in the business continually; a trait that property managers need to possess to navigate the pandemic successfully.
Beepo’s own recent research has uncovered the following three facts concerning the impact an offshore outsourced team can have on a real estate business:
- Reduction in cost of labour by 25%: Beepo customers have reported that an offshore team has allowed them to reduce the cost of labour related to managing their rent roll from mid-40% to as low as 25%.
- Productivity is 20% higher: By putting the right people in the right jobs they perform better, are more satisfied at work, and their productivity increases by about 20%.
- 3-7 minutes to process a new tenancy application: Having offshore staff complete all the groundwork in assessing new tenancy applications, onshore Property Managers have reported they only need to touch an application for between 3-7 minutes.
Indicators of a recovering market
Ultimately, the market remains volatile but shows promise as we look past the pandemic. If done correctly, outsourcing can provide agencies with significant improvements in turn around times and productivity and reduce costs. Research also shows how real estate agencies continue to realise increased efficiencies the longer they have an outsourced team and the more extensive that outsourced team grows.
Considering implementing an offshore strategy to support your real estate business throughout 2021, but not really sure what to ask prospective providers? Download our free eBook, 33 questions to ask your real estate outsourcing provider and make sure you are armed with the right questions to ask and set you on the right track to selecting the most suitable provider to help you grow your real estate business and guarantee success.