Could the property market rebound by spring? Here’s where will fare the best
April 10 2020
Property experts are cautiously optimistic of a rebound in the market for the spring selling season, as long as the coronavirus outbreak is under control and consumer confidence levels rebound.But the experts note that a recovery won’t be uniform across the market, with certain pockets faring better than others.
Domain economist Trent Wiltshire says property prices have held up reasonably well so far considering the effect of the pandemic on the market and the dismal economic outlook.
“So far there has been a bigger impact on the number of properties transacted than on property prices. But we could see things start to slow from here.”
Wiltshire says banks’ commitment to allow people to defer their mortgage payments for six months, record low interest rates and the federal government’s JobSeeker stimulus package should also help support the residential property market.
“Few people will be forced to sell even if there is a deep recession. But if the downturn lasts for 12 to 18 months we could see forced sellers.”
First National Real Estate chief executive Ray Ellis says the longer it takes to contain COVID-19, the greater the impact on the property sector.
“But early signs indicate government initiatives are slowing the spread of the coronavirus, so it’s possible the market will begin to recover in spring, following lower stock levels and softer results during autumn and winter,” says Ellis, who believes other factors will also moderate the impact the virus has on property prices.
“Housing values are likely to be somewhat insulated considering unprecedented government stimulus, leniency from lenders for distressed borrowers and record low interest rates,” he adds.
State of the market
Ellis says the premium end of the market has been the hardest hit so far.
“This sector always demonstrates the most price elasticity,” he said.”It led gains through the first quarter – now it’s showing the fastest decline in growth rates. More affordable price ranges will be less affected.”
Wiltshire agrees. “Higher priced areas tend to be more volatile in a downturn and they also tend to rebound faster. But this situation is so different it’s hard to say whether this will be the case this time.”
Nevertheless, Ellis believes the property market will continue to slow while consumer confidence levels remain muted. “Although low interest rates and the likelihood of low stock levels could underpin and slow declines in values.”