The market will power on!
Many potential property buyers have been waiting for the day JobKeeper would come to an end. The idea of snapping up a bargain has been on the minds of many around the country, but it seems it may just have been a pipe dream.
The market is set full steam ahead, despite these support measures ending. It seems very unlikely that distressed selling from investors will happen as they have already survived the worst last year. This may also be due to tighter lending standards which were put in place in 2015.
This news comes in contrary to the belief many economists have held with worries of a fiscal cliff that would impact all parts of the economy.
So, it seems ‘safe as houses’ still rings true. Homes have barely been impacted by this pandemic-induced recession – only dipping briefly, then soaring in cities and regions, despite predictions of doom and gloom.
Last year, at the peak of the crisis, home values dropped by a fraction in a tight window period amid the fears of the support measures ending in September. But then they didn’t end…
They only ended a few days ago. At the same time, mortgage holidays are also set to end, and rental eviction moratoriums will stop.
While economists acknowledge this will be a painful time for some individuals as they lose work, they believe it will have no impact on the property market.
EY Oceania chief economist, Jo Masters said the housing market absorbed those changes well last year when house prices accelerated and the economy continued to improve.
“I actually don’t think it’s going to have a dramatic impact on house prices and the housing market. We’ve already had two step-downs in support,” Ms Masters said. “The step-down in October was bigger than the one we’re going to see at the end of this month.”
There’s good news on the unemployment rate currently, with the rate falling to an 11-month low of 5.8 per cent, down from 6.3 per cent in Feb. Also, there’s already a demand for skilled migrants to be allowed back in the country.
It is expected that the expiry of the wage subsidy will put about 110,000 jobs at risk, however, this pales in comparison to the overall strength of our economy. It’s believed by many economists that the end of JobKeeper will have very little impact on the housing market.
The concerns were valid in September as the economy was very different at that point, with a lot more people on JobKeeper and a higher unemployment rate.
The only thing that could possibly impact the market is if there was a hike in interest rates and regulators cracked down on bank lending like they did in 2015-17 – but that is very unlikely to happen any time soon. Policymakers will welcome lifts in activity over choking it. The market is currently being driven by owner-occupiers and first home buyers.
Some pockets of Australia may face a little turbulence with Melbourne’s CBD and Queensland tourist locations being some of the hardest-hit areas. However, this won’t change the outlook of the property market.
House prices probably won’t keep going at the current rate, but it’s unlikely to crash either. Things just might level out a little bit. A little housing market sanity will be greatly appreciated by many.