After two years of a bearish property market in the two major cities, the last quarter of 2019 and early 2020 saw a resurgence in property sales and prices. Now the industry is in virtual lockdown with on-site auctions banned along with open for inspections to the masses. So how will this play out in the coming months for the property market?
Anyone with a property at the time remembers the lows of the GFC, and many industry pundits expected similar similar declines with the onset of COVID-19.
However, what is different to the GFC is that with COVID-19, it is the actions of the government rather than market forces, namely the shutting down of entire industries in an effort to minimise the effects of the virus. The critical factor will be how long those closures will continue for.
With predictions of 10% unemployment and the economy to contract by around 4%, the expectation should be a significant contraction of house prices. Industry pundits, economists and financial watchdogs were suggesting as much as 30% falls in some cases could be the result. However, government’s unprecedented support measures across the board have provided a level of artificial support that has safeguarded house prices to date where single digit falls have been the norm in Melbourne and Sydney while other cities have barely noticed anything.
While those people in highly impacted industries combined with high LVR mortgages remain vulnerable and continue to struggle, for the majority of mortgage holders in largely unaffected industries and jobs, the life time low interest rates have provided a significant silver lining and are reaping the benefits of refinancing to fast track their mortgage elimination goals.
Undoubtedly, property prices will be impacted in Melbourne and Sydney as the two major markets continue to wrestle with COVID-19 restrictions. In other population centres however such as Brisbane, Perth and Adelaide, where the pandemic is largely under control, the outlook is far more positive.
Brisbane and South East Queensland are predicted to benefit enormously from the V shaped recovery with a surge of interest from inter-state migration, expats returning home from foreign posts and international immigration inquiries seeing predictions of 20% growth in housing prices by 2022.