Should You Prepare for a Property Market Resurgence?
There’s no denying that the property market has seen a lot of disruption over the past few months, brought on by the devastation of COVID-19. However, as serious as the effects of the coronavirus have been, doom and gloom property market predictions aren’t the only side of the story.
Between the government stimulus and rising auction clearance rates, the forecasted crash of 30% of property values across Sydney may not hold much water. We’ll look at more of the signs of a property market resurgence, how to interpret them, and what you can do to start preparing.
Telltale Signs of a Property Market Resurgence
We’ve seen good news coming from New South Wales in terms of recovery. Despite the unemployment and general economic uncertainty, auction rates went from 40% in April to 66% in May. Compared to the same time last year, the number of homes sold is actually higher.
We’re also seeing buying activity rise alongside searches and inquiries. Part of the confidence in buyers right now is undoubtedly stemming from the efforts of the government. There are a variety of stimulus packages available for NSW buyers, including the First Homeowners Grant Scheme, the First Home Buyer Assistance Scheme, and the HomeBuilder program.
This is in addition to the low interest rates, which show no sign of changing anytime soon. This month, the RBA held the interest rate at the historical low of 0.25%. This is a veritable buyer’s market, and it’s likely to stay that way for a while.
In terms of the numbers, home listings have fluctuated from month to month, but the market saw a 21% increase in listings in July. While sellers might be at a disadvantage, we’re still seeing some competition to keep home values from going the same way as the interest rates. It’s no wonder St. George Bank has forecasted that home values could start moving up as early as next year. Historically, Sydney’s demand has always stabilised house prices, and we continue to see that here.
What This Means For You
The signs of a property recovery will mean different things, depending on whether you’re a property investor, first home buyer, or renovator. If you’re a first-time home buyer or an upgrader, now might be a good time to apply for the relevant stimulus programs and lock in the low rates. Home prices have fallen enough for more people to enter the market, even those who might not have considered buying before the pandemic.
For property investors, real estate could be a more lucrative option when compared to shares. The values may not recover again for several years, depending on how the economy shifts, but lenders and market experts are optimistic that property values won’t continue to dip. As long as you’re willing to make a time investment, a property purchase could be the best move for your portfolio.
How to Start Preparing
This is a good time to start your preliminary research by consulting with Shore Financial who acts for many lenders. Interest rates are expected to stay low, now and in the future. However, even if rates do stay low or even fall further, you don’t necessarily have to hold out hoping for the eventual nadir — there is still the chance that rates could increase too.
You should also look to see which stimulus package you’re eligible for. For example, if you want to be a part of the homebuilder program, you’ll need to sign the contract before the end of the year and start the project within 3 months of your signing date. If you’re applying to the First Home Buyer Assistance scheme (FHBAS), you cannot have received another concession from the scheme.
Then prepare with all the right documents when you apply for a home loan. Note that if you’re currently on Jobkeeper or you’ve seen your job drastically impacted by the coronavirus, this will likely impact your risk assessment by the bank.
Finally, you should partner with a trusted expert who can help you navigate the property climate and complex lending landscape, to get approved with ease. The property market may have been negatively impacted by the pandemic, but there’s no denying that there are signs of a resurgence. If you’re interested in taking advantage of low interest rates and falling house prices, Shore Financial’s experts can help you figure out your next move.