The property market does the unexpected: Fears of prices crashing have eased for now
With most homeowners seemingly able to repay their home loans after having ‘mortgage holidays’ and property sales continuing to happen, it is pleasing to see that the doomsday predictions of impending price crashes are highly unlikely to occur.
While we have been saying that forecasts are difficult, it is somewhat of a relief that the predicted price falls of as much as 30% have not come to fruition.
Despite the worldwide pandemic, high unemployment, and the economy being in recession, the Australian housing market is proving to be remarkably resilient and since mid-October appears to be on the move again.
Aided by the fact that prospective buyers are outnumbering sellers, the auction clearance rates and sales, in general, have been strong. Auctions have been clearing at about 70%.
Buyers have good reason for confidence as our economy has been well propped up by the state and federal governments: - employment seems to be rebounding, interest rates, the lowest they have ever been, are on hold for at least three years and the banks have been keen to write new loans.
To give you an idea of the change in attitude, the ANZ, one of the least pessimistic forecasters of some months ago is now saying their forecast of a possible 10% reduction in property values has been replaced by price gains of around 9% across Australia next year.
Median prices have increased in all capital cities over the past year, while since March this year, prices have strengthened in Adelaide (leading the way with 3.5%), Brisbane 2.7% and Sydney 1.5%.
Westpac is predicting double digit growth in house prices over the next two years.
Confidence to continue
The general feeling among forecasters is that the existing confidence will continue into next year, despite the high unemployment rate likely to take some time before it is reduced to a normal level.
While overall prices are predicted to increase there is some concern about outer new suburbs and CBD apartments. Rental levels have fallen and the demand in most cities has not been strong – the exception being Perth where the vacancy rate is at a staggeringly low 0.95%.
Sydney home sales activity is roughly the same as a year ago while values are about 6.0% higher.
What about our area?
The Turramurra / North Turramurra suburb is one where demand exceeds supply. There are always people aspiring to move into the area.
Due to the pandemic, properties coming onto the market have been fewer than usual so, overall, the period to sell has been relatively shorter than many other localities and prices remain relatively strong.