Property prices holding up well despite current events, Normal?

[Deactivated] on 14/06/2020 - 16:05
Last edited 18/06/2020 - 20:36

There's been so much talk about potential property price drops of over 20%, some even predicted 40-50%. I've been in the market to buy a home for a few weeks now and so far not only have I not noticed a drop, many places have actually gone up in price by a tiny few %.

Making an offer has also been difficult as most vendors are only willing to reduce the price by 5% or less, most only 1-2%…

Am I under the wrong impression that the market is supposed to be not so good? Or have I just been meeting tough vendors/agents? I'm in Sydney.

What are your thoughts on property prices now that the pandemic is (slightly) over?

—18 June—
Adding new Domain report here: https://www.domain.com.au/news/options-for-first-home-buyers…
Looks like not only have property prices not changed much, people who do not currently own a home may be among the most affected 😒

Financial

Comments

  • fantombloo on 14/06/2020 - 16:22
    +4

    now that the pandemic is (slightly) over?

    That might or might not be true. But sh1ts just bubbling at the moment and not hit any fan yet. IMO just wait.

    • inherentchoice on 14/06/2020 - 17:18
      +2

      Will it be over if it becomes endemic, and just another respiratory disease with only mild symptoms in a vast majority of cases?

      • fantombloo on 14/06/2020 - 17:44

        Will it be over

        "It" isn't necessarily the prime issue any more, definitely not in context of the OP. Lots of "damage" has been done and we haven't even properly surveyed the outcomes yet.

        • brendanm on 14/06/2020 - 20:48
          +1

          Yep, main damage has been done financially to lots of small (and some not so small) businesses who have been forced to shut, lay off staff etc.

  • arkie0 on 14/06/2020 - 16:30
    +12

    People who lost jobs and hours are probably still on payment loan freezes with their bank. This will end around September. These people also have access to 20k super which may or may not last til September.

    By September, if we're back to normal then prices won't drop.
    If we're still in lock down, then prices will drop.

    • Boogerman on 15/06/2020 - 17:06

      In regards to pre-Covid19 unemployment levels, we won’t be back to normal for 2-5 years
      Lock down has little to do with house prices. Income availability does

      • arkie0 on 15/06/2020 - 18:49

        Understood, so no correlation between lock down and unemployment.

        • Boogerman on 16/06/2020 - 04:48

          Even when lockdown is over, the economy will still be smashed & continue to be smashed for long after

      • capslock on 15/06/2020 - 19:11

        Income stopped being the main driver of house prices years ago. That's why average income earners need to move further and further away from the city or into smaller apartments.

        • Boogerman on 16/06/2020 - 04:47
          -1

          Loan credit is the greatest determinant of house prices, hence why after the fraud uncovered at the Royal Commission, house prices dropped
          Income level determines loan amounts

  • Ema000 on 14/06/2020 - 16:46
    +3

    Just another hype by the News and speculative economists - property prices won't drop, they will remain stable at the very least and won't increase by much compared to previous years

    • ihbh on 14/06/2020 - 18:08

      property prices won't drop

      Too simplistic. Over the last 3 decades we've had a huge sustained fall in interest rates. Guess where they'll head over the long term once this is over? What do you reckon will happen to property prices?

      • dcep on 14/06/2020 - 18:54
        +4

        heading to negative interest rates

    • GourmetFoodie on 14/06/2020 - 19:58

      This.

    • SydStrand on 14/06/2020 - 20:08
      +6

      property prices won't drop, they will remain stable at the very least

      That's also speculation and wishful thinking. Fact is, we haven't felt the full effects of this pandemic. Just wait until welfare payments wind down, the moratorium on evictions is lifted, and people attempt to return to jobs that no longer exist. Then we'll truly see mortgage pressure reflected on the market. Just look at rental prices: they've fallen off a cliff, which is already scaring off investors.

  • CyberMurning on 14/06/2020 - 16:53

    Of course normal. That's why it is called the best long term investment. Doh…..

  • inherentchoice on 14/06/2020 - 16:54
    +3

    most vendors are only willing to reduce the price by 5% or less, most only 1-2%

    It's not just supply and demand. When vendors don't reduce the cost of the supply then the market won't come down. But apparently nearly 40% of households are in mortgage stress, so with rising unemployment that might force the market to come down?

    According to this news recent article:

    The forecast for property prices in the coming year and beyond differs depending on who you ask, but all economists agree – there will be declines across the board…

    Dr James Brugler and Dr Jonathan Dark, economist from the University of Melbourne, said housing markets are slow to react to broader economic turmoil

    “House prices usually take longer to reflect what is happening elsewhere in the economy for a number of reasons,” Dr Brugler and Dr Dark wrote for the university’s Pursuit magazine.

    “Essentially, houses are harder to buy and sell than stocks and bonds, houses differ greatly from one to the next, and people value houses as more than just investments.”

    It quotes forecasts/models ranging from a few % drop to a 20% drop. No one really knows.

    • netjock on 14/06/2020 - 17:13

      Don't forget Australia's biggest trade partner that buys 30% of exports is not picking up the phone because they are not happy with Australia. What would even a loss of 10% of exports would do the economy.

      Who knows. Double down on property to try to make up the difference. Just like the US stock market.

  • djones145 on 14/06/2020 - 17:30
    +10

    too early to call, later in the year we will know
    ~ bank repayment holidays stop
    ~ landlords and renters deal around not evicting ends
    ~ job keeper ends
    ~ if borders still closed, economy will be impacted and also overseas buyers (most might just call and buy anyway)
    ~ how the economy recovers from recession
    ~ how many lockdown divorces (sell houses)
    ~ how many lockdown babies (upgrade houses)
    ~any more.govebrment initiatives to help property market

  • Ghost47 on 14/06/2020 - 18:18

    It's still too early to see the effects of COVID-19 on the property market. As mentioned by other posters factors such as Jobseeker, banks freezing mortgage payments, landlords extending help to their tenants etc. will eventually end later this year so we might see movement then.

    IMO though I don't think prices will drop drastically because every man and his dog wants to buy their own property and property investors want another investment property. Australians just love property.

  • capslock on 14/06/2020 - 18:23

    Buyers are still paying pre-pandemic prices and they can't all be stupid. They would have seen the predictions from the so called experts yet they are still betting real money that now is a good time to buy even at current prices. I don't think prices will drop.

    • mskeggs on 14/06/2020 - 18:34
      +4

      Why can't they all be stupid? Transaction volumes are lower.

    • dasvenson on 15/06/2020 - 12:47

      Depends how long they are buying for. If they aren't selling for 20 years then maybe they could have paid less now but might not matter as much in the long term

    • Whisper Quiet on 15/06/2020 - 15:31

      There's so many buyers who are actually corporations, overpaying for property to dominate the market. Normal buyers still want to buy a place of their own. Just because prices are advertised as such, doesn't mean they're selling for that price. Over the last few weeks I've seen houses get a decent amount lower than advertised.

  • Meho2026 on 14/06/2020 - 18:45
    +6

    Don’t look at sale prices
    Not many people are moving home
    Not many people are selling
    The prices we are seeing now are settlements from 6-12 weeks ago
    Look at rental prices, the arse has fallen out the market, there is no demand in the capital cities.
    The sale prices should follow that
    Property prices and the share market are defying the underlying fundamental reality. It doesn’t make sense.
    Step away from buying shares or property, the shit is about to hit the fan. At then moment it looks like the trigger point is September

  • Blue Cat on 14/06/2020 - 18:49
    +2

    Because 💩 hasn't hit the fan yet. Wait until bank loan freezes stop and the free money from pappa gubment (under the names of JobKeeper and JobSeeker) stop.
    I am sure we will see plenty of forced-sales because people will need money. Especially those with big mortgages and no income.

    Just wait.

  • dcep on 14/06/2020 - 19:02
    -1

    Sorry mate, you'd have to wait longer.

    It usually take 3 years from start of downturn to hit the bottom.

  • elgrande on 14/06/2020 - 20:04
    -4

    I am predicting a big spike.

    30% growth.

    Better get in quick.

  • TheBilly on 14/06/2020 - 21:25
    +1

    In February everyone was saying the above will happen in June. It's now June.

  • Hardlyworkin on 14/06/2020 - 22:07
    +1

    I think there will be more people (like me) considering a move further out from metro areas after realising more frequent working from home is possible.

    I think the biggest fall here in Victoria will be in the glut of inner city apartments geared towards students. Rent prices already look to be down considerably. Will be interested to see the follow on affect.

  • OzFrugie on 14/06/2020 - 23:57
    -2

    Govt will prob just extend job keeper come sept if economy is still bad using the miscalculated 70B budgeted.. banks will offer other type of support ie. Change to IO for a specific period.. Westpac already doing this i think..

    But if the above doesnt happen esp the first one then more likely than not it will drop… maybe not on sep but closer to end of yr.. settlement usually around 2-3 mths so the hard data will lag for at least that time..

  • ozbargainerlife1 on 15/06/2020 - 00:02
    +3

    wait unti september…. not trying to demotivate but its going to get worse once these reliefs finish.

  • nebula98 on 15/06/2020 - 07:59

    I have always written that when the government let's people use their superannuation fund money that is the time to sell property, if buying wait till end off year.
    Even the government cash for home renos only help the rich and people who already had the money to spend on renos…….
    I was at a new housing estate office out Geelong side of Melbourne and was to old blocks of land had fallen 20k ,I was having a great chat until bloody China man showed up,I was just about pushed out of office,ps bloody parking of said people I had to do a 3 point reverse turn to get out of the car park.

    • netjock on 15/06/2020 - 11:09

      I was having a great chat until bloody China man showed up

      He might be a Chinese-Australian, Korea, Vietnamese. They look very similar and most people outside of Asian people wouldn't notice the difference.

      ps bloody parking of said people I had to do a 3 point reverse turn to get out of the car park

      It is what happens when two people buy SUVs that hardly fit into said parking spaces. Seen plenty of 3 point turns in shopping car parks.

    • SydStrand on 16/06/2020 - 20:57

      I was having a great chat until bloody China man showed up

      Also, Dude, Chinaman is not the preferred nomenclature. Asian Australian, please.

  • HeWhoKnows on 15/06/2020 - 08:38
    +1

    People dont understand the property market.
    Unlike the sharemarket it is influenced by other factors and moves VERY SLOWLY!
    COVID19 took it back to a snails pace so you wont notice anything just yet
    Thats why prices have remained stable - a few sales dont make a market.

    Now the interesting thing is that COVID19 created some pent up demand which helped clearance rates and prices when auctions commenced again.

    Those clearance rates started to slip in recent weeks but again are holding steady by renewed confidence in the market.

    Key factors to watch:
    Unemployment rate and immigration are the biggest property drivers but watch auction clearance rates once the 6 month mortgage holiday is over.

    Just remember that the RBA has run out of gun powder so the Govt is the key to providing any incentives in propping the property market and they will because its the only "manufacturing" industry left in Australia.

    Whether they can maintain property prices at such dizzy highs is the big question.

    With rents crashing in recent weeks that should start (normally) to take the wind out of property prices as well. But we are in a bubble market where important considerations such as rental yield are being ignored by "speculators" expecting to profit from higher prices. Thats because the reduction in rental yield and hence reduction in affordability has been offset by the recent reduction in interest rates but for how long will this last?
    I heard recently that property was very affordable at current rates (WTF).
    But as we all know interest rates cant go any lower!

    • netjock on 15/06/2020 - 11:12

      I heard recently that property was very affordable at current rates (WTF).

      They don't look at values to wages.

      Only reason it is more affordable is reduction in interest rates. Now everyone is trapped into 30 year repayments at ultra low interest rates. Central banks have trapped themselves, if they raise the rates there will be so many personal bankruptcies the economy will definitely go into depression.

  • [Deactivated] on 15/06/2020 - 10:23
    +2

    Maybe it'll really come down to how affected mortgages are after the Jobkeeper money runs out.

    To be entirely honest though, most people around me have had little to no impact to their jobs so far so I do wonder how many people have actually lost jobs and how many of them actually have a mortgage on top of that. If the people who have lost jobs (maybe affected retail and hospitality most?) do not have a mortgage anyway then the effect may not be as bad.
    Obviously I may be simplifying things…

    • vetopower on 15/06/2020 - 18:04
      +1

      As you can see from this graph, the Grattan Institute is estimating that the unemployment rate in Australia has not been this bad since the Great Depression in the 1930s: https://i1.wp.com/blog.grattan.edu.au/wp-content/uploads/202…

      As you can see from this graph, it took 5 years for Irish property prices to bottom out after the 2008 financial crisis in that country. There is a very large lag time in property prices: https://www.irishtimes.com/polopoly_fs/1.3952388!/image/image.png_gen/derivatives/landscape_620/image.png

      In short, you need to be far more patient. People don't lose their jobs one day, then sell for a 40% discount the next. It is going to take many months, if not years, for the full effects of this economic crisis to hit the property market.

      • [Deactivated] on 15/06/2020 - 18:35
        +1

        So by the sounds of it, if I'm buying a place to live (and the mortgage will be somewhat the same as my rent, if not cheaper) then there's probably no point waiting?
        Because it's not like within the 5 years I don't pay rent anyway…. But I suppose if getting an investment property it'll be wise to wait it out first.

    • SydStrand on 16/06/2020 - 20:54

      To be entirely honest though, most people around me have had little to no impact to their jobs so far

      You may be insulated by your industry. I don't personally know anyone who's lost their job due to COVID, but I'm not a 20 year old working retail anymore. If this happened when I was at that life stage, the vast majority of my co-workers would be screwed right around now.

      If the people who have lost jobs (maybe affected retail and hospitality most?) do not have a mortgage anyway then the effect may not be as bad.

      Even if you don't have a mortgage, there are still indirect effects of job loss. Two of my parents' investment properties had tenants renegotiate rent to lower rates. One lost their job, and while the other is still working, they were able to negotiate due to market pressure. Other investors are also spooked > reduced competition in the property market for occupiers +/- recently unemployed selling in desperation > theoretically lower house prices. Just wait and see.

  • Boogerman on 15/06/2020 - 17:12
    -2

    It’s sad how many dumbass comments there are in this thread
    Jobkeeper, jobseeker, mortgage moratorium & business grants are still to be turned off. Unemployment is rising.
    Rents have crashed
    In a few months, prices are heading south,

  • Some Guy on 17/06/2020 - 00:53

    Government will chime in with a HouseKeeper payment to stop mass homelessness. Plus they'll further stimulate the real industry with stamp duty concessions for all and other incentives to prop up the market.

    • arctan on 17/06/2020 - 11:07

      it also depends on population growth and demand on properties. The real effect will appear post Sept this year.

  • arctan on 17/06/2020 - 11:10

    As long as international students are unable to return the rental market will suffer not to mention already declined employment rates.
    When rental market is bad then the ripple effect will pass on to landlords and eventually force them to sell properties at discounted prices.
    The whole process will take quite a few months to years. So end of year is the critical time on property prices but at this stage not very positive.

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