With Sydney back in lockdown, there’s a lot of speculation about how it will affect the economy in the near future. The fear is that the country will have two recessions in just over a year, which is a feat considering there hasn’t been a technical recession for nearly 30 years.
We’ll look at how ongoing COVID outbreaks will affect the shape of the economy’s trajectory and how that may affect Sydney’s property market.
No one is denying the impact of an eventual recession. In fact, considering the unemployment rates and restrictions, the economy is likely to be hit harder this time around as opposed to the first round of lockdowns. The Commonwealth Bank’s head of Australian economics, Gareth Aird, expects GDP to contract by 0.7% in the fall and a rise in unemployment during the summer.
However, the forecast for the property market is not as dire as you might expect.
Shore Financial’s CEO, Theo Chambers says
“The economy may hurt more this time around vs last but the property market is not going to crash or even dip. It will just lose a bit of steam which could be a positive thing, the reason it will lose steam is the following.”
From retail to construction, economists are seeing a lot of change all over the country. The more we press pause on production and consumerism, the more likely we are to see big economic consequences come down the line.
Case in point, we’re seeing more invalid approvals for property buyers. A lack of job stability can cause the lender to essentially renege on certain approvals. For instance, let’s say that Penny was conditionally approved for a $500,000 loan at a 3% interest rate. During the time she’s searching for a home though, she loses hours at her job as a retail manager due to lockdowns. In this case the lender would need to be notified and Penny’s conditional approval reassessed.
Buyers applying for approval need to know how lenders work to ensure they get the loan. Nothing is ever promised or guaranteed until the loan is formally approved and loan contracts are signed. Whether you’re in an industry that is likely to be affected by further lockdowns or your hours have been unexpectedly cut, it helps to be prepared by communicating these changes or concerns to your Shore Financial broker.
Of course, this doesn’t mean that all is lost.
Shore Financial has a team of Sydney property experts who can tell you more about which banks will approve buyers based on their current (and potential) employment situation. Despite the fact that some loans are riskier than others, such as those with less than a 20% down payment, there may still be a way to get the property of your dreams.
Property experts are seeing a drop in auction volumes, with a 17% fall in early July. There’s been a withdrawal of properties for sale, which is expected to last until after the lockdown restrictions have been lifted.
Again though, this is not all doom and gloom for the country. Despite the fact there was a drop in properties, the market saw high clearance rates with the properties that were up for auction. With 660 properties up for sale, CoreLogic reported that 76% cleared.
Plus, there are still ways to get the services you need when you need them. If you’re concerned about property inspections in Sydney, you can still set a one-on-one appointment with a real estate agent in the region.
There’s a lot to be said about the current lockdowns in the state, particularly as they threaten the rise of prosperity after the first round of lockdowns. Shore Financial knows that these times can be tough on many people, particularly for those who aren’t as secure in their employment as they would prefer. Getting through this doesn’t have to mean putting your property plans on hold indefinitely though.
Turning to the right people for help can be the key to making the most of your situation, whatever that happens to be. Whether it’s the right time to buy for you or it would make more sense to wait, our mortgage experts can steer you in the right direction.
Let the Shore Financial team help you see things a little clearer and explain how different lenders work to help borrowers just like you.
Contact us today to learn more about our services and why we have the expertise to identify all your options.