As the pendulum swings back to a state that resembles ‘normal,’ might this be the time to buy, build and renovate? We look beyond the doom and gloom at the rainbow ahead.
As the Australian economy begins to recover after a tumultuous 2020, and as Victoria rebounds with encouraging momentum, this may be the opportune time to optimise your investment with a new home build, development or home renovation/extension.
It seem we may have just pulled out of a technical recession, with three consecutive months of positive GDP growth. Whether this trend continues and for how long is anyone’s guess but it’s certainly encouraging news. Spending on home renovations and additions is up 5%, as homeowners seek to boost the quality and liveability of their homes. This trend is expected to continue for some time.
The Reserve Bank of Australia (RBA) has the official cash rate at an unprecedentedly low 0.10% and according to Westpac Bank’s Chief Economist Bill Evans, the RBA are unlikely to raise the cash rate anytime soon. Furthermore, banks are showing a renewed appetite for lending which will sustain borrowers’ expectations.
Mr. Evans goes on to say that cash savings are up 5%, the Australian dollar is gaining strength, net exports are up for the July-September quarter, and the Australian Stock Exchange (ASX) has recently registered its best month in history, up 13.5%. Wages are up 2.3% and we’ve seen a 3.4% jump in household income.
The promising news of an imminent vaccine for Australia and around the world has also encouraged previous GDP forecasts to be upgraded. Closer to home, house prices are predicted to increase by a minimum of 4% in 2021 and a further 10% in 2022.
The Victorian State Government is investing in State infrastructure projects to further stimulate local jobs and the economy. Together with the recent Victorian Government stamp duty waiver of 50% on the purchase of a new residential property and 25% on the purchase of an existing residential property, both up to the dutiable value of $1m. We expect the market to respond favourably and we are already experiencing a significant lift in building enquiries for 2021 and beyond.
NB: please consult with your accountant for updates on whether this waiver applies to first home buyers and repeat buyers, and with your financial adviser to determine whether you a building contract is the right investment choice for you.