The news for the property market is surprisingly good. Australian’s have always had a love affair with property and it appears that even a pandemic of global proportions hasn’t shaken the property market.
Latest data from CoreLogic shows that part of the decline in sales volumes is the lack of listings, not that there aren’t buyers wanting to buy. Currently, the amount of stock available for sale is about 25% lower than it was around this time last year. While the doomsayers were predicting a flood of distressed or forced sales, there is only 0.09% of valuations being done for a ‘Mortgagee In Possession’ situation, which is almost 20% lower than a year ago.
Source: CoreLogic Early Market Indicators
Loans for purchases up 27% on last year
The best way to forecast what the property market is doing, is to look at the finance statistics. An early indicator of changes is to see what people are planning to do with their money. CoreLogic Early Market Indicators as of 24 May 2020 show an increase 26.81% of valuations for loans for new purchases. This is exciting news for the property market as it shows that buyers are keen to buy now, and more competition means better outcomes for sellers.
Pre-listing activity is also on the increase. Pre-listing figures are based on the volume of property reports generated by either a real estate agent or a mortgage broker. Sellers and buyers use these property reports to gauge the value of a property before they sell or buy. The volume of property reports generated is highly correlated with the number of new listings added to the market, so this is a key indicator that there will be more properties coming onto the market in the coming weeks, particularly once the borders reopen.
Source: CoreLogic Early Market Indicators
Property still the choice over shares
Property experts looking into the impacts of Covid-19 on the residential real estate market found;
Negative economic shocks do not necessarily lead to severe declines in property prices;
Property does not see the same declines as shares during a downturn, because it is used to live in and therefore not as speculated upon as shares; additionally, it cannot be bought and sold as quickly as shares, meaning price movements are not as volatile;
Due to the temporal nature of the COVID-19 downturn, vendors may hold high expectations for their property value and simply hold off selling until the economy returns to full-scale production;
The current high level of household debt amplifies the risk of an adverse change in household circumstances such as loss of income, unemployment or illness on housing market conditions; and,
The number of property transactions have seen more drastic declines in response to economic shocks, and could be even more affected amid the COVID-19 downturn.
Looking to buy or refinance?
Now really is the time to get your finances in order, particularly if you’re looking to reduce your interest rate. With low interest rates like 2.55% standard variable interest rate for owner occupied P&I or 2.09% for a 2 year fixed rate on owner occupied P&I, reducing your home loan costs is easy to do with the help of Mint Equity. Give us a call today to find out the best interest rate for your situation.