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People are reassessing their lifestyle choices. Some people are moving to bigger homes, some are going to regional and rural areas and others are deciding to renovate their current homes.

When Covid-19 struck Australia last year, property experts predicted dire consequences for the real estate industry.

But despite lockdowns, closed borders and severe economic restrictions, the pandemic instead sent prices spiralling out of control and created the very real possibility of an impending property bubble.

This has happened for a number of reasons according to real estate veteran and the Director of KR Peters, Peter Nicolls.

Mr Nicolls said the closure of Australia's borders and the restriction on overseas and interstate travel has resulted in people spending more time at home.

"People are reassessing their lifestyle choices. Some people are moving to bigger homes, some are going to regional and rural areas and others are deciding to renovate their current homes."

Mr Nicolls said the $25,000 HomeBuilders grant, designed to stimulate the building industry by encouraging renovations, had been a "bonanza" with improvements adding tens of thousands of dollars to the sale price of family homes.

In addition, expats have been returning home to the relative safety of Australia where the Covid pandemic is largely under control.

Hong Kong buyers have been the most prominent, actively buying property throughout Australia.

And within Australia there has been a flight to the regions.

"Regional Victoria has seen a huge influx of city dwellers making the move out of the suburbs for a more relaxed and work from home lifestyle. Many Victorians have also decided to move interstate, in particular to Queensland," said Mr Nicolls.

"The Mornington and Bellarine peninsulas have also been flooded by retirees and Baby Boomers opting for a sea change. These locations are also popular with people working from home two or three days and driving to the city for work a couple of days a week."

"The result has been that people have realized that there are more buyers than properties on the market which has driven prices up beyond pre-Covid levels."

Mr Nicolls said confidence had rushed back into the market with buyers feeling increasingly comfortable investing in bricks and mortar.

Confidence has been further buoyed by the Reserve Bank indicating low interest rates are here to stay for at least the next three years.

"The drop in interest rates to the lowest in history, meant homebuyers effectively were in a position to borrow more. It was the medicine homebuyers were keen to swallow," Mr Nicolls explained.

He said some homebuyers had been able to enter the market 12 to 18 months early thanks to the raft of government incentives on offer including the $10,000 First homebuyers Grant , Stamp Duty savings , the First Home Loan Deposit scheme and HomeBuilder.

The banks have also assisted by relaxing their previous tight lending criteria, enabling buyers to borrow more than previously anticipated.

The result has been an avalanche of sales.

The average time it is taking to sell a property has plummeted to between 14 and 21 days.

"At KR Peters we are experiencing record sales and, in some cases, up to 70 groups inspecting a property as soon as the property hits the market," Mr Nicolls said.

"If market conditions were to stay as they currently are we would experience price growth in the vicinity of 10-15 % over the next 12 months. With prices having already risen by 10-12 % over the previous 12 months, this effectively means prices will have increased by close to 25 % in two years."

However, he warned such rapid growth was unsustainable, especially when banks are only offering approximately .045% for term deposits.

"It will be interesting to see what stimulus incentives the government cease and continue after March 2021 because if they make no changes then the property market will be a runaway train and the price of housing will become out of reach for the average Australian."

"And when the borders are opened and immigration returns it will only add to the upward spiral of property prices."