#69: Market update - Have we hit the bottom of the property market?
http://propertyplannerbuyerandprofessor.com.au/ In this week's episode of the Property Planner, Buyer and Professor Podcast, the team analyse the macro economic factors which are pointing to property values being at a pivotal turning point towards an upward trajectory. To balance the conversation, the trio also discuss some of the risks which may hold values back. Dave, Cate and Pete take you through: 1. Why property values are likely to rise by 10% in 2021 and into 2022 Weighing up the market forces at play, (and in the absence of a loss of control of COVID case numbers) it's looking likely that we're at an inflection point in the market and we'll be gearing up for a property run. 2. How property values have remained relatively stable throughout COVID As we've been saying since the beginning of COVID, (and contrary to the property doomsayers and alarmists), due to a reduction in supply, property values had a floor underneath them and Dave, Cate and Pete felt that national median prices were unlikely to drop more than 5-10%. Well, the results are in! 3. The green shoots emerge Property values in 6 out of 8 capital cities have recorded an increase in median values over September. The two exceptions have been Sydney and Melbourne; Sydney has recorded a slight decline in values of 0.3%, and the reduction is decelerating from previous months, which is typical before an uptick. Melbourne's median value has declined by 0.9%, and we know that Melbourne is getting their COVID cases under control from the second wave, so we expect the recovery will be a few steps behind the other capital cities. 4. How low can interest rates go? Interests rates have been slashed and dashed since mid 2019, with a total drop of 1.25% so far. RBA pre-pandemic modelling suggests that when the cash rate is dropped by 100 basis points, property values will increase by 28%. Yes, you heard right, 28%. With more whispers in the wind about a further rate cut - watch this space. 5. Responsible lending laws to be axed Now seen as a 'handbrake' on our economic recovery, responsible lending laws are due to be repealed in March 2021, which will open up ease of access to lending. There's nothing like making it easier to borrow money to heat up the market. 6. Ready, set.. SPEND! With nothing to do and nowhere to go, Australian's are saving more money than ever. Coupled with the 'wealth effect' from rising property values, consumers spending money locally instead of overseas will have an enormous impact on the economy. 7. Unemployment looms From our own analysis, led by the Property Professor himself, we discovered somewhat surprisingly that in the recent recessions and hikes in unemployment, property values remained obstinately consistent, barely showing any reductions greater than 5%. This is not to downplay the horrific impact that the pandemic has had on some businesses and Indvidual's. That remains. The trio believe that the impact on property values is likely to be less than many people imagined. 8. Vaccines, migration and riding the waves Towards the back end of 2020, we can expect to see viable vaccines in production, international travel slowly coming back online and better management of COVID breakouts. Practice makes perfect, and by now, we would hope Victorian's are well versed. 9. International recovery blueprint Looking overseas at other Western countries, positive housing stories are playing out in the US, UK, Canada and NZ where values are increasing and we are not far behind. 10. And of course, our 'gold...
Sign in
