Do you have any idea what is actually happening with the property market?
If you can find two people who agree on exactly what’s happening, listen to them, then wait a day and ask them again to see what their new position is……. then make your own decision. The fact is that the situation remains fluid. At the start we saw predictions of falls of up to 30%. That turns out to have been a little over the top. Australia’s normally resilient property market came to the fore yet again.
While property in general has remained reasonably stable throughout the COVID experience to date, the Victorian resurgence and the rise in cases in Sydney and Adelaide of recent date, once again applied a little uncertainty to markets of all types, including property.
Personally, my money is on slight falls across the board except in the area of commercial office space, where falls will likely be more drastic. As iterated by NAB below, the rise and rise of Zoom and other web based communication mediums, along with people and companies realising that working from home can actually work, will likely lead to a higher level of vacant office space, particularly around the CBDs. This situation is likely to create an ongoing oversupply of office space, which is in fact, already evident. The bright side is that office rents will very likely continue to decrease into next year as falling tenancy rates apply pressure to owners.
NAB’s chief economist Alan Oster sums the situation up as follows:
“When you look at house prices, our expectation is 10% to 15% down.
And the main reason is the two big drivers. Number one population. I don’t think that you are basically going to open up international migration for at least the next 12 months, so that means population growth halve And the second thing is unemployment. Normally when unemployment goes above 8%, you are in deep trouble.
“And all those things are going to pull the housing market down… [But] the one area I am particularly worried about is commercial property. For me, I think Zoom is permanent in terms of people working from home… The vacancies in some of the [CBD] areas, I think there is already massive oversupply.”
Immigration, which has been one of the main drivers for property growth over the past 10 years, has obviously taken a huge dive. That was actually a no brainer that will possibly affect Sydney more than elsewhere. It is likely, however, to affect all the capitals and some regional areas to some extent. I’m betting that the Federal Government will also use this opportunity to make some adjustments to immigration policy for the future. Stay tuned for that one.
The drop in visitor numbers hit the tourism market in a huge way and added many to the numbers of unemployed around the country. Queensland, with its large international and domestic tourism industry is probably going to feel the effects of not only international borders being shut, but domestic borders having only just opened as well for some time yet.
Mid-year unemployment figures, with Queensland leading at 8.8% probably point more to the fact that the “Sunshine State” has been keeping the sunshine to itself and keeping everyone else in the shade. The ramifications of this on the huge Queensland tourism and related industries have obviously been a likely reason for the higher level of unemployment.
If Oster’s summary is to be believed, these figures would seemingly point to Queensland as heading for “deep trouble”. Yet the constant “no new cases” coming from Queensland throughout the year point to the situation not panning out as bad as many had expected.
Regardless of who’s property forecast opinion you follow, the fact remains that property is now more affordable than it has been for some time. It’s a great time to get into property and look to the future.
If you’d like a FREE consultation on what to buy and where to buy it, contact us at Premier Property Buyers Australia.
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