Housing prices to tumble: Can we expect any turnover in the property market?
It wasn’t that long ago that property prices were edging upwards, but the stop in commercial activity and widespread job loss caused by the coronavirus pandemic has since seen confidence in the property market take a nosedive.
A combination of harsher lending restrictions, social distancing measures and general uncertainty means it’s likely we won’t see much turnover in the property market in the coming months.
“In the immediate term, particularly during the June quarter, we are expecting to see far fewer properties on the market across all states and territories and house prices to take a hit,” said RiskWise Property Research CEO, Doron Peleg.
In April, Westpac’s Consumer Sentiment report saw expectations for house prices plummet by 50.8% – the largest monthly drop in the 11 years Westpac has been asking the question. The ‘time to buy a dwelling’ index also dropped 26.6% from the previous month.
While owners might be justified in feeling a bit unsettled, Peleg advises those who aren't under pressure to sell right away to wait out the current slump.
“The current market conditions are temporary. Those who can hold on to their property through this period should do so, as we expect to see a very strong reduction in supply, especially in new, high-quality listings,” he said.
Opportunities emerge for low-risk borrowers
With unemployment set to double in the coming months, banks have rushed to tighten their lending criteria. Already we’ve seen several announce increased serviceability restrictions for workers in high-risk industries, as well as casual, contractor and self-employed borrowers.
Restrictions like these will likely further erode buyer confidence but according to KnowHow Property Finance founder, Bushy Martin, low-risk borrowers could see the playing field tilted in their favour.
“In these circumstances, potential buyers who can jump the financial hurdles and pessimistic property valuations from the banks will be well positioned to negotiate and maximise the looming buyers’ market,” Martin said.
“Pre-approved buyers armed with the latest, comprehensive data will be well positioned to establish their preferred price, but it will also rely heavily on their ability to negotiate and manoeuvre the selling agent, who plays an important role in protecting and presenting their client’s interests.”
If you’ve got your sights on a particular property and are confident your job isn't under threat, a shrinking pool of buyers could be to your benefit. For tips on navigating the property market, plus an overview of the kinds of home loan rates currently available, visit our home loans comparison page.