House prices are just one of the many things upended by the coronavirus pandemic in Australia.
Those looking to break into the housing market have been teased with predictions that property prices will drop in the foreseeable future.
This doesn't automatically mean it will be easier to buy, or that now is the right time to do it, but there are some good cases for taking the plunge sooner rather than later if your circumstances allow.
Four experts have weighed in on what the coronavirus pandemic means for the housing market. Here's what they say.
Is a breakthrough coming for first home buyers?
Depending on your specific circumstances, there could be — but there's really no guarantee.
CoreLogic Head of Research Eliza Owen says declines in property values so far have been mild, but that's not the only factor that's up for consideration.
"I don't think the downturn is a time to be celebrating affordability unless your income is steady and you're confident about your future earnings," she says.
"Over the next one to two years, we would expect that property prices will see a decline, probably of no more than 10 per cent nationally."
SQM Research founder Louis Christopher says even with detailed projections estimating where the housing market could go next, it could impact different people in drastically different ways.
"Potentially it's good for those who have the ability to buy a home, because potentially we may see more affordable housing by way of house price falls but, if we look at the reason why prices may fall, that's for bad reasons," he says.
"If I was potentially looking to buy a home right now, I would be waiting. There's a lot of uncertainty, and I don't believe the uncertainty that's out there has been priced into the markets yet.
But Professor Steven Rowley from Curtin University's School of Economics, Finance and Property says there's no rule that prospective buyers can't make a move now rather than later.
"I would suggest if you are in that position with a stable job and a good income, it's probably not the worst time to go out and look," he says.
"If you do find somewhere that you're really keen on, see if there's the potential for a deal to be done.
"There was a lot of demand out there before the crisis hit and unless you've been dramatically affected, there's still a lot of people out there who are thinking about buying and probably haven't changed their mind."
No shortage of factors to consider
During uncertain times, there are even more aspects to think about when making a decision on buying property.
University of Adelaide Professor of Housing Research Emma Baker says recent property sales data showing prices holding steady may not have factored in huge unemployment hits caused by coronavirus shutdowns.
"What we’ve seen over the last four or five weeks has been the last hurrah of sales," she says.
"If you're a young person forming a new household and you would normally get your first home, you might delay that until you know what's happening.
"Or, you might delay it because you can't get a loan from the bank, because banks will probably get more strict on their lending."
Ms Owen says transaction volumes, listings and consumer sentiment index numbers have all dropped but the "new normal" of low transaction activity is starting to stabilise.
"People are being very cautious about property right now because it's a high-cost, high-commitment purchase and people are uncertain about their jobs," she says.
"The key is incomes really, that's half of affordability and at the moment we're seeing pretty dramatic losses in wages paid compared to what we're seeing in property values.
Mr Christopher has been faced with the tough task of predicting what could happen to property prices over the next few months and even years.
"It all rests with what's going to happen with coronavirus and I'm not a medical expert," he says.
"So, it's extraordinarily challenging as an analyst and a forecaster to really predict what's going to happen, other than saying 'if coronavirus does this, this is what we can expect. If coronavirus does that, this is what we can expect'."
He says despite most forecasts predicting that prices will fall, there's no 100 per cent guarantee.
"Right now there're actually no bargains. Vendors are holding their ground, that's what the data is showing us. There might be bargains later in the year, we don't know," he says.
"With all the cuts in interest rates and quantitative easing, which is effectively money printing, we may well see dwelling price rises as a result of just those two factors."
Professor Rowley also says the impact of low population growth, a weaker rental market connected to limited overseas migration, consumer confidence and people who were previously in a position to buy losing their jobs will all have an impact.
"There are an awful lot of factors which mean demand to buy housing has fallen, so that will feed through into what happens in the next few months," he says.
"Different areas will recover quicker, those areas with your traditionally strong levels of demand, good schools and so forth.
House prices aside, rent is already on the way down
There may be no guarantee of cheap houses, but the price of rentals has already taken a hit as a result of coronavirus.
Mr Christopher said closing international borders had a huge impact on rental demand from holiday accommodation like Airbnbs right through to long-term.
"Last year we had net migration of 240,000 people," he says.
"Generally speaking, the first thing most of those people do is rent a property when they come to Australia, they don't buy straight away. We're not getting any of that underlying demand for rental properties right now."
Newly-built dwellings that are likely to increase vacancy numbers and young people waiting out the uncertainty at home are other factors influencing the rental market.
"The fact that overseas migration to Australia has virtually stopped means that's quite a significant shock to rental demand, so that's where we're expecting to see a lot of pain in the property market," Ms Owen says.
"But if your incomes are steady, that means there could be much cheaper rental opportunities in more desirable areas as well."
Advice to first home buyers
Everyone's circumstances are different, so there's no one-size-fits-all answer on whether now is a good time to buy a home.
But our experts have shared their tips to consider if you're trying to make the big decision for yourself right now.
"How secure is your job, how secure is your income? If it is secure, think carefully about where it is you want to live in light of the experience over the last few months, and do research. Get out there and see what's available."
- Steven Rowley
"If I was trying to get into the housing market, in the list of priorities, number one is getting in. In a way, all the surrounding things are secondary so you would go ahead and make the best of it."
- Emma Baker
"In the current environment, it's really hard to know what employment is going to look like over the next few months. I'd imagine people would want to be very confident in their finances before making such a big purchasing decision."
- Eliza Owen
"There is no rush. Buying your first home is a major life event. It's very difficult to time those life events, and they shouldn't be timed necessarily to market conditions."
- Louis Christopher
DISCLAIMER: This is general advice only. If you need individual advice, please see a professional.
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2020-05-15 20:05:51Z
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