Since the second wave of the COVID-19 pandemic, the uncertainty in the property market has been growing. It’s suggested, without the help of government stimulus packages and mortgage deferrals, home owners will struggle to pay their mortgage repayments and bargains will soon be able to be found, however according to Duncan Tonkin, from Villa Finance Group in conjunction with mortgage wholesaler Australian Mortgage, only 15% of home lenders used the mortgage repayment holiday, and within three months 48% had returned to paying back their mortgages, making home owners more confident with how the economy is moving.
According to EY Bank Chief Economist, Jo Masters, household disposable income is up in the second quarter to June 2020, effectively telling us that the hit from job losses and weak income growth is ahead of us, not behind us, making it possible for a price decline in the property market. However, there is a resurgence of first home buyers entering the market and a small number of people relocating keeping the market buoyant. ING reported that 46% of first home buyers feel confident to buy in this market, with 32% willing to wait 12-24 months before entering, as first home buyers spend less on social and personal needs, giving them more opportunity to save.
More confidence is created as AMP’s chief economist Dr Shane Oliver, believes an RBA rate increase is at least 3 years away. And Leah Calnan, REIV President reassures us that Melbourne’s property market is stable, which ultimately gives confidence to investors moving forward. As more people realise they can achieve a work-life balance from the comfort of home, there is new found flexibility in what people want from their home, giving a rise for demand for more affordable entry level properties in the outer suburbs.
However, Dr Oliver, believes that we will see a fall of house prices of 12 to 13 per cent or more if more lockdowns are imposed leading into 2021, with higher effective unemployment and businesses going bust without government stimulus beyond March 2021.
Either way, at Woodards, we find that the market is continuing with a surge of new property eager to come on for Spring, making it a great time to get your property ready and make the move you’ve been wanting to do, but been putting off due to COVID-19.