While the COVID-19 pandemic has had an impact on the Australian property market, it hasn’t put an end to transactions entirely. Investing in property has long been a tradition in Australia, but the COVID-19 outbreak has changed the tone of 2020 financially. However, for property investors, this could present an affordable opportunity to buy a home.
What will happen to housing prices?
Canstar reports this as the most Googled question since the beginning of the COVID-19 outbreak. The Reserve Bank cut rates soon after news broke of the developing coronavirus to encourage buyers. However, there has already been a pullback from buyers which will take momentum out of the market and may lead to some price falls.
The last time Australia faced a major economic crisis was the global financial crisis of 2008. During that time, many experts forecasted a real estate crash but house prices in the capital cities actually rose 13.6 per cent in 2009 and 6 per cent in 2010. Predicting the effect COVID-19 has on property prices is therefore difficult. But given the current environment, buyers who are in secure jobs are actually in a better position because the overall market is weaker.
Will rent be affected?
The Federal Government has announced JobKeeper and JobSeeker stimulus packages to help Australians who have lost their income due to COVID-19. Despite the stimulus, there is some downward pressure on rents and this is most obvious in the capital cities. States and territories too are pushing for landlords to hold off on evictions for up to six-months if rent payments cannot be made as a result of lost income due to COVID-19. The pandemic is likely to continue the downward pressure on rents in the short term.
Low interest rates
Not only are property prices likely to dip in the major capital cities and hot spots around the country, but interest rates too are also incredibly low. The major banks have been quick to pass on the Reserve Bank of Australia’s interest rate cuts to encourage buyer behaviour and help to stimulate the economy.
Am I still able to inspect a property?
The current social distancing restrictions placed on the real estate industry have banned open homes and on-site auctions, but it hasn’t cancelled transactions altogether. The way you inspect a home will largely take place online, with listings including video, 3D modelling and virtual walk-throughs. Most meetings will likely take place via video and contract signing will also be done online. However, you can still request a private inspection should you wish to see property in person.
The Reserve Bank of Australia maintains its outlook that the Australian economy will see a growth pick up over the next two years, and that the economy will rebound at the end of 2020. So, it’s important to remember that a rebound in the property market will happen. And it’s likely to happen by 2021.