Home values are holding strong during the COVID-19 pandemic as Australians closely monitor how the fall-out of job losses and wage cuts will likely affect property markets across the country.
Real estate analysts say the full economic hit of the coronavirus crisis may not be known until early October after financial supports like Centrelink’s JobKeeper payment, other government stimulus and mortgage hiatuses offered by banks are due to end.
Executive manager – economic research at realestate.com.au, Cameron Kusher, said property seekers had their attention keenly trained on the sector.
“We are seeing very high levels of search activity on our site so clearly people are interested in tracking property prices,” Mr Kusher said.
“There are a lot of people out there hoping that prices will fall and maybe that will be the case. Equally, I think that there are a lot of people who are ready to buy right now – they haven’t lost income, they haven’t lost their job, and they’re watching very closely what’s coming up for sale on the market knowing that there’s fewer people looking around to buy.”
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Everything could change in Spring
Mr Kusher said the end of government stimulus and support measures; as well as the resumption of mortgage payments in late September would be a critical time for the economy.
“I think we’re at a point now that there’s been the JobKeeper and JobSeeker [schemes], banks have offered mortgage holidays and we’re seeing the economy is starting to open back up again,” he explained.
“The next risk outside of a potential second wave [of COVID-19 cases] is what happens in mid-September when some of the support measures start to be removed.
“That could be a potential challenge for the market in as much that some of those jobs may not be back, some of those people may not be able to pay their mortgages and may have to sell their properties.”
Professor Steven Rowley, from Curtin University’s School of Economics, Finance and Property, said speculation was rife about what will happen post September.
“It depends on so many factors. Firstly, what’s going to happen when it comes to employment and how many people are likely to get their incomes back to the level they were before the pandemic,” Professor Rowley said.
“That in turn will affect how many people are actually able to keep their dwellings after the mortgage deferral period and to what extent banks are prepared to extend that deferral period. That will dictate in September how many properties come onto the market.
“That’s the critical time. If a lot of people have got their jobs back and the economy is improving then the impact won’t be quite as severe as a lot of people are talking about.”
Professor Rowley said the longer-term effect would be a decline in population growth, which would impact demand for properties – both in the sales and rental markets.
Rental market under strain but people are still buying
Mr Kusher said younger Australians had been hit hardest by job losses and wage reductions, which in turn had impacted the rental market.
“We’re seeing already that in the rental market there is an oversupply and a lot of overseas students aren’t able to come into Australia at the moment,” he said.
“Typically it is younger people who rent, so rental stock is certainly one of those items that there is going to be less demand for and we’re probably going to see some price reductions.
“At the other end of things, it’s very different to the GFC. People in good, stable employment and high paying jobs are probably weathering this storm somewhat better so the premium end of the market might continue to do reasonably well.”
“And from a first homebuyer’s perspective, there’s still a lot of stimulus from state governments out there. There might be an opportunity for a first home buyer if you’ve got relatively secure employment while there’s a little bit less competition in the market.”
The Property Council launches plan to boost real estate sector
Last week, the Property Council of Australia mooted a $50,000 grant from the Federal Government in an effort to kickstart the sector in the aftermath of the COVID-19 pandemic.
The proposal was outlined as one of a raft of incentives including the construction of new homes, improving the supply of affordable housing and encouraging migration to boost the pool of potential buyers in a bid to stimulate the construction industry and support jobs.
“Some big and bold thinking is required to get the Australian economy going again after the impact of the COVID-19 pandemic,” said Property Council of Australia chief executive, Ken Morrison.
“As Australia’s biggest employer which contributes over 13% of GDP, the property industry can be a powerhouse behind economic recovery and growth with the right policy settings and market incentives from the federal, state and territory governments.”