Welcome to The Buzz September Issue 2020
Going from strength to strength
Many of our local property markets appear to be going from strength to strength. I think this is another great reason to be grateful that we live here.
But it’s just been revealed that the pandemic has had more impact on local businesses than we may have thought. Almost half of those operating here on the coast were accessing Jobkeeper in May. Moreover, our rate was 9.1% above the national average.
Furthermore, we are now officially in a recession with a 7.0% drop the biggest fall in GDP ever recorded.
As a result, we can expect things to get tougher and stay tough, for some time. Consequently, what will happen to house prices and transaction volumes?
So, where to from here for real estate?
Property ownership is too high a contributor to our wealth, and government revenue, for Governments to allow a massive collapse. Nevertheless, that doesn’t mean the recession will not have an impact.
Frustratingly, there is no consensus amongst experts as to the extent of the effect. However, there are some points of general agreement:
- At present employee, income support measures, and deferral of bank loan payments are protecting home prices.
- Higher unemployment, a stop to immigration and rent holidays will push prices lower in 2021.
- Home prices are forecast to fall by around 10-15 per cent (for example in Sydney and Melbourne)
But, as I repeatedly stress, there is no unified singular market. Instead, there are numerous unique markets, each with its own set of conditions.
Without a doubt, varying locations and divergent property types perform differently. Indeed, they have done so in previous “booms” and “downturns”. Equally, they will behave differently in our current economic circumstance.
In your neighbourhood
Recently I have been working with buyers who have just paid above list price. Undoubtedly, they did so to not miss out on a desirable property in a sought-after location with few houses for sale.
In contrast, I also know vendors using other agencies to sell their property. Unfortunately, those properties have remained on the market for several months despite price drops.
In short, when looked at generally there is evidence to support differing trends and insights.
To sum up, the most likely outlook locally is for:
- prices to fall modestly in some areas & be broadly steady in others
- a sluggish increase in transactions from low levels
Get proactive about your property!
Ultimately, at an individual level, any decision must be heavily influenced by your circumstances.
For example, if your property is in a suburb or an area that experiences a fall in prices. In this case, even if that decline reaches the upper predictions, this only becomes a problem for you if you need to sell.
Despite this, are you worried that you might end up in a position where you must sell your property for a loss? If so, then get proactive now.
- Make small, affordable, and impactful improvements you can do you to add value to your asset.
- You can talk to your mortgage provider about the potential for extending your loan deferral period.
- Try not to get too preoccupied with “predictions” at a time when no one can predict anything with any certainty whatsoever.
- Do your best to be clear-headed, concentrate on the facts, not on speculation.
- You should seek professional advice where needed.
- And focus on the next three months. It will help you to avoid the emotional rollercoaster that the news headlines can take you on.
Now is the time to act and prepare yourself for the opportunities that will present themselves as the market moves on.
With this in mind, please call us to have a chat and discover how we can help!