Welcome to The Buzz October Issue 2020
Really cheap money is about to become really easy to get
Several factors impact property markets. Cheap money has been the most significant influencer. And now it just got a turbo boost.
Due to interest rates at the lowest levels ever seen, and probably, the lowest ever to be seen, money is incredibly cheap to obtain. For borrowers, it could not be more appealing. And now, to make borrowing easy, the Federal Government is about to remove all the ‘responsible’ lending restrictions.
As a result, that really cheap money just got really easy to get.
So, get ready for even more buyers to charge our local markets.
What else has driven demand for local property
The latest sales statistics show that our local markets are amongst the strongest in the state. Undoubtedly cheap money has been the great enabler. However, there are other reasons local property has been a top performer. Such as:
- Massive infrastructure & development spending.
- Local tourism has benefited from a ban on international travellers.
- The normalisation of work from home has made it easy to relocate.
- Limited supply in the best spots (you can’t build more beach!).
- Subsidy schemes have boosted demand for vacant land.
- Subsidy schemes have given a boost to first home buyer activity.
Does that mean everything is looking rosy now?
Not quite. The economic impact of the COVID-19 recession has been delayed, not removed.
Also, there are other hurdles to get past. For example:
- Jobkeeper will run out at the end of the year.
- The rental moratorium must end at some point.
Finally, over 230,000 bank loans are currently not having repayments. There is $160 billion of mortgages frozen. The banks do not want to dump properties on the market. Nevertheless, many non-performing loans will occur and forced sales will eventuate.
Tourism locations in Queensland feature significantly on the list of loans with deferred payments. Noosa Heads owners must especially take note.
Some of those owners currently not servicing their mortgage will gamble on hanging on. However, they may be better off managing their exit to take the best advantage of buyers with cheap and easy money to spend.
Keep watch with The Buzz as these situations unfold throughout 2021.
More vacuum effect
The budget forecasts have the Federal Government extending the first home buyers’ scheme and home builder boost schemes.
As with other grant schemes, this will not create demand. It will just bring it forward.
These schemes and government support will have to end at some time. Expect a large drop off for land and first buyer activity when it does.
The glass half full neighbourhood
I expected markets in my core areas to remain stable once the initial ‘shock’ of the pandemic passed. Happily, they generally have done well.
In addition to severe shortages of supply, we have experienced continuing high demand. Hence beachside suburbs have seen days on the market often reduce in this last quarter.
Furthermore, as we now have easy money, we can likely expect the equation of supply not meeting demand to continue.
If/when it does, I think we can have more positive expectations for prices.
So, we can view the glass as half full.
Would you like to take advantage of all those buyers with cheap and easy money?
Please call us to have a chat and discover how we can help!
Make sure you ask about our special offer!! (available for properties listed for sale in 2020)