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Closer look at the property market amid COVID-19

6D ago 0 Replies 76 Views
According to chief economist at, Nerida Conisbee, “we’re still very early on in this health crisis and the residential sector hasn’t been significantly affected just yet.”
As the situation unfolds, this is what the experts do know.
The property market is cautious
Conditions are changing daily in the property market and must be considered on this basis, explains Cameron Kusher, executive director, economic research at
“The challenge facing the housing market, at this stage, is confidence.
“If we look at the broader conditions, the cost of borrowing is lower than it has ever been, banks are continuing to lend, and demand is higher than it was a year ago.” 

The economy will be buoyed by economic stimulus
“If we look forward to Spring, it’s likely the property market will surge ahead on the back of unprecedented stimulus being put into the economy, and a return to normalcy for buyers and sellers,” says Conisbee.
“Some commercial property segments have been hit hard, including tourism and hospitality, while some forms of retail, like supermarkets, have benefited in the short-term.”
But remember to keep the risks in perspective, she says, and try to stay calm.
“Job losses may occur in the short-term, but companies will need to rehire once the pandemic abates and the economy comes back.”
Kusher explains, there will be a huge amount of stimulus in place for the housing market, and the broader economy, once the pandemic is over.
“It is reasonable to expect that there will be a surge in both demand and supply of properties on the back of these very accommodative monetary policy conditions.”
The sharemarket doesn’t reflect the housing market
Although finance markets are experiencing volatility, it’s not the economic indicator you might think.
“Sharemarket volatility isn’t a great gauge of the economy, it is more a reflection of the level of angst in the market right now,” explains Conisbee.
She expects this trend to continue post COVID-19 with specific segments receiving ongoing investment, while others may continue to struggle for some time.
“If we look overseas, China is back with retail and manufacturing starting up again, which is a really good sign.
“The US has cut rates to zero and quantitative easing has started, while in Italy, banks are holding off on mortgage payments. We may see these measures implemented in Australia,” she says.

Don’t change your plans out of fear if you can avoid it
Suffering a loss during the lowest point in the market is every property owner’s nightmare. But for those who are feeling rattled by the Coronavirus headlines, they may well find themselves making this critical mistake if they aren’t focusing on accurate and timely sources, says Melbourne buyer’s advocate, Cate Bakos.
“For all of the sellers who lose in a down market, there is an inverse winner who capitalises on their situation.

Investors could cash in
When it comes to investors, many property portfolios will switch to become cashflow positive, Bakos explains.
“A cashflow-neutral property essentially means that the owner has a ‘set and forget’ scenario on their hands.
“The property is not costing them any net outgoings, and the owner is less likely to feel financial stress that forces them to consider liquidating the asset.

Interest rates are at a record low
We’ve seen yet another interest rate cut, bringing the cash rate to a record low.
Buyers’ borrowing capacity in the current climate is set to be unprecedented, says Bakos.
“Heightened borrowing capacity as a result of the consecutive cuts is anticipated to be stronger than the post-election bounce back.
“Every 25-basis-point cut we enjoy is a growing percentage of heightened capacity.”
Supply is still low
While COVID-19 is making the market jittery, the underlying realities of supply and demand will still be with us, virus or no virus, explains Bakos.
“Compounded by potential vendor retraction, cancelled auctions, limited stock supply and a growing population from overseas migration, our supply and demand ratio could become quite problematic in the recovery of COVID-19. 

Many houses are currently selling for above their reserves
Amid this current climate, there have been numerous successful auctions across the country last Saturday.
This two-bedroom home at 37 Ellendale Road in Noble Park on the market at $750,000 and sold for $856,000 with multiple bidders.

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