Australia's property market has a good track record that could potentially help it weather the impacts of the COVID-19 outbreak, said John McGrath, founder and executive director of McGrath Estate Agents.
While prices have already softened in big capital cities, the rate of decline remains constrained and some areas, particularly regional markets, even reported gains.
"Property price falls have been very mild, even in Melbourne, largely due to record low-interest rates, loan repayment deferral options and stimulus measures including JobKeeper and JobSeeker," McGrath said.
The most significant impact of the outbreak so far has been the decline in sales activity due to social distancing and lockdown measures that reduced consumer confidence. McGrath said the resilience of property prices will depend on how well the virus outbreaks are contained and how the economy will respond. Unemployment, he said, is one of the most significant risks to property values, as it correlates with mortgage arrears.
"If people can't pay their loans, they usually sell. Buyers also tend to delay decisions when they're feeling uncertain. This can lead to an accumulation of supply, which softens prices," he said
However, the low interest-rate environment is making lending conditions ideal for many homeowners and buyers, allowing them to refinance with ease.
"This should help many owners who have retained their jobs but lost hours and therefore income," McGrath said.
Another reason why the rising unemployment amid the COVID-19 is having muted impacts on prices is that most job losses are in industries dominated by renters. This means that the rental market is currently under greater stress than the sales market.
McGrath said there is potential that house prices post-COVID-19 could bounce back the way they did after the previous economic downturns.
For instance, while values declined by 7.6% during the Global Financial Crisis, house prices have recovered significantly, with Sydney and Melbourne reporting gains of 66.9% and 39.8% within the 2012-2017 period.
"On days ahead when things look gloomy, remember Australian property's amazing track record of comparatively small pullbacks during major economic storms followed by healthy bounce-backs," he said.
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