Property Price Predictions & First Home Lending Scheme Updates! - May 2020 š”š²
The Australian public has done well to adapt to social distancing laws relative to the rest of the world, but what does this mean for the property market? Will there be an adverse effect on the market as a whole? What is happening to our interest rates and bank offerings? What does this all mean for potential first home buyers in this trying time? All this and more in this monthās blog!
COVID-19, to buy or to sell? That is the question!
While thereās been plenty of speculation amongst economists on the state that Australiaās property market will find itself in post COVID-19, the general consensus is that prices will fall. But the main question is when will they fall and by how much?
Though we donāt have a crystal ball to look into the future, there are a few facts we can hang our hats on.
The Australian governmentās Jobkeeper/Jobseeker initiatives have definitely contributed to median house prices remaining relatively stable over the past month or so.
Further to this, the mortgage holidays and repayment pauses many Australians are experiencing also plays a part in why thereās (so far) been no drastic change to prices. Even clearance rates appear to be holding steady, yes thereās less stock available, but itās clear that buyer activity is sound - see the results from the weekend ending 31 May 2020.
The real question is what will happen once these initiatives stop?
Many economists predict that low prices will peak in the later stages of the 2020 year as unemployment reaches 7%, potentially moving to double digits in early 2021 and when unemployment rises, prices tend to fall.
To put this into perspective, unemployment rates were sitting at roughly 5% before COVID-19 struck and now the experts are predicting a 2% jump which is a significant increase
Now, this doesnāt mean prices are guaranteed to fall because of high unemployment, but if Jobkeeper/Jobseeker funding runs out and unemployment stays at these record-high levels, then it is a very real possibility.
Weāre still in the early stages of being able to tell if a drastic property price drop is imminent, but itās definitely something weāll be keeping a close eye on in the near future. A positive to note is, the banks are still offering super low interest rates, and cashback offers for refinancing has ramped and economists predict these low rates will be hear for another 3 to 5 years - we do too at Black & White Finance for the short term at least.
We've also seen our political leaders discuss stamp duty changes and this has triggered a lot of interest amongst many of our clients of late, regarding changes to the way our high stamp duty is calculated. Some buyers are in two minds; do we hold out and wait for some type of reform and miss out now on the stock available, or see it as speculation only and simply proceed now because it wonāt ever change and we donāt want stock levels to fall.
Nevertheless, we've got our ears to the ground, watching these rates, cashback offers and reforms closely and would with open arms welcome the stamp duty reduction, who wouldn't?
Bingo! July FHLDS spots already filled!
The National Housing Finance and Investment Corporation (NHFIC) recently released data that suggests over 5500 spots have already been secured under the Australian governmentās First Home Loan Deposit Scheme, which sees the first 10,000 applicants able to borrow up to 95% of the property value, without the need to pay lenderās mortgage insurance.
These spots have understandably filled out fast with many young Australians eager to break into the property market. Although it is still subject to change, as some of the reservations are still going through eligibility checks, so if they donāt make it then this would open up to the next person waiting in line, and so on.
Interesting to note here is that the difference between the January round and now is that previously the scheme was only open to NAB and CBA, whereas now it is extended to include 25 non-major lenders as well.
The next round of 10,000 spots will become available in July 2020 as confirmed by the NHFIC.
Final Thoughts
Another month has come and gone in this new world we live in.
Many have adapted and overcome the challenges theyāve been presented with and made the most of the crazy situation weāve found ourselves a part of.
The main thing is we all never gave up and life went on, and it will continue to go on well after COVID is done.
All of us in the team here at Black & White Finance have been working really hard to provide the best possible experience for each of our clients amidst this period of uncertainty and will continue to do so for as long as we can.
While we canāt predict if or when property prices will fall, how many spots we can secure during the next FHLDS scheme, or when the next property boom will be, we can definitely offer you a service you wonāt get anywhere else.
Whichever way this thing goes, weāll be there with you every step of the way.
See you in next monthās blog!
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