Locked Down but Not Down and Out
Just as things were starting to get back on track for the property market, lockdown 2.0 happened. Things may be a little bit of a worry for a little while, but overall the market will be okay. Let’s take a look at where we’re at and where we’re headed.
Overall, June was a pretty positive month for the Australian property market. We even saw some of the best conditions since lockdown first started in mid-March. Of course, things went a little south down south and the Stage 3 restrictions in Melbourne and Mitchell Shire have forced auctions back online and open for inspections to be appointment only.
We don’t have a crystal ball to share what the future holds for the property market in Australia when this pandemic is finally over, but I am feeling cautiously optimistic thanks to 5 key trends.
One. Buyers are still active and sellers’ activity trends upwards
Things are looking good online with the number of home buyer searches continuing to surge on realestate.com.au – in July figures were up 72.5% from the April lows. Every other measure of demand captured on this site has also reflected excellent conditions – the best since lockdown started. Even before the dreaded Rona hit, we’re talking the last 12-18 months, there was an issue of supply, with very few properties listed for sale. The higher consumer confidence in June is seeing more properties come back on the market.
Two. Low distress sales
We’re not seeing too many distress sales online with only a handful of mortgagee listings in June out of 160,000+ listings. It’s important to note, this is even less than the number listed this time last year.
With JobKeeper being extended ’til March, the Government has bought us all a little more time to get back on our feet. It will be interesting to see what happens when assistance from banks is slowly withdrawn from mortgage holders. We also need to keep on eye on high rental vacancies as less foreign students enter the country.
Three. First home buyers are out in force.
There’s been a seriously high level of enquiry for first home buyers in June, doubling in most capital cities. Those grants and bonuses from developers may be too good to refuse. While first home buyers are active, we are seeing less activity from investors.
This is possibly because the stimulus measures like the federal governments HomeBuilders scheme excludes investors. First home buyers are lapping up these new developments though with a very high demand for house and land projects.
The only worry moving forward is a drop in both local and offshore investing may result in delays for planned developments.
Four. House prices aren’t collapsing
We’re staring down the barrel of a recession with unemployment rising, but surprisingly house prices have remained steady as you can see in the graph below:
Despite the uncertainty, we’re even seeing property prices rising in places like Canberra – particularly in their premium suburbs. Of course, all of this could be due to stability of the banking sector and government stimulus measures. We’ll watch and wait to see what happens next.
Five. Melbourne could be in a little bit of trouble for now
With the goods news there is some bad too. It is possible that the surge of cases in Melbourne could mess with Melbourne’s property market. However, this could be good news for the rest of Australia as investment is driven north…as long as COVID doesn’t wreak havoc elsewhere.
We really don’t know what’s going to happen next with this nasty virus. All we can do is wait for the vaccine to be released and focus on maintaining consumer and business confidence. This confidence will keep things ticking along and will help all industries, including the property market make a sharp recovery.