WHAT TO EXPECT FROM THE PROPERTY MARKET OVER THE NEXT 6 MONTHS




With Covid restrictions being slowly eased and things returning to some form of normality, the big question for property investors is: how will the market perform as we get to the other side of the pandemic crisis. 

Some economists think we could see an 11 percent decline in values nationwide. Others believe it will be even worse, with predictions of a 32 percent decline. 

The fact is that no one has a crystal ball, so accurate predictions are impossible. However, we would do well to take note of the following:

  1. Downward pressure on rent

Thanks to Covid-19, short-stay platforms like Airbnb have suffered a huge drop in demand. This has resulted in many properties from these platforms coming on to the rental market; in turn this has placed downward pressure on rental prices. The same applies to areas with large international student populations. Soaring vacancy rates have brought more stock on to the market, thus placing further pressure on rental prices.

  1. Conditions across capital cities

In April, the rental vacancy rate across the country increased by 0.8 percent to 2.5 percent. Sydney and Melbourne were the worst hit, with listing increases of 36.2 percent and 34.1 percent, respectively. Areas with large numbers of retail and hospitality workers, international students and other people from overseas were the most affected.

  1. Immigration

Immigration has proved to be a boon for the property market in recent years, but we could see a drop of 300,000 over the next few years because of COVID-19. Places that had a large migrant intake may be the worst affected as far as rents and property prices go. 

In reality no one can be sure where property prices will go, and what kind of policy response the government may come up with if things turn really bad. So in the meantime, owners and investors should ensure their mortgage is suitable for their particular situation and will allow them to weather any economic downturn. In fact, this approach to your mortgage is one you should adopt at all times.

* This article does not constitute financial or legal advice. Please consult a professional financial and legal adviser before making a decision.


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