Ray White Now | Updated weekly Ray White Now | 26 May | Page 8

If I am considering selling,
why should I go to market now?
While the current selling conditions are strong, it remains
extremely hard to predict what may happen in the
property market over the next 12 months and certainly
the next few years.
There are many economists predicting that property
prices will decline over the next year or so. When you
consider the two basic fundamentals that drive property
prices, supply and demand, many are suggesting that
supply may outweigh demand in the next six to 12
months and possibly longer, creating conditions less
favourable for sellers.
How have these opinions been derived? The key
government stimulus packages (JobKeeper and JobSeeker
to name the two most significant) are currently scheduled
to end in September 2020. Banks have offered a large
number of homeowners mortgage deferment support
which is also scheduled to end in September 2020.
Many experts are saying that when these support
measures come to an end, we will start to see larger
volumes of new properties come onto the market causing
a large supply of properties available for purchase.
Regarding buyers, the withdrawing of government
stimulus and the potential for a steep rise in
unemployment may result in less buyers having the
ability to purchase properties. The Australian Treasury is
forecasting unemployment to reach 10 per cent in the
months ahead.
Home values are holding up strongly after two months
of Australia in lockdown, but a big test looms in October
when government and bank assistance dries up.
New data from CoreLogic shows capital city prices have
barely moved in two months despite warnings by some
forecasters property values could collapse by 30 per cent.
Economists and real estate specialists say prices have
been propped up by JobKeeper and other government
stimulus, lenders’ mortgage repayment holidays and ultralow
interest rates.
What many economists are saying that the next
12 months may hold:
• JobKeeper and JobSeeker support finishes;
• Mortgage deferment support ends;
• Significant rise in unemployment; and
• Therefore the number of properties for sale will
increase and there will be less buyers looking to
purchase property.
There are some economists that are not as concerned
by these potential risks to the economy. They point
out that significantly low interest rates will provide an
important buffer to home affordability, and that the rise
in unemployment is in sectors that will not materially
impact buyer activity. However, even these economists
acknowledge the downward pressure on prices over the
short-term.
Because of the above considerations, the news is full
of comments by economists speculating that property
owners will not achieve a better result by waiting to sell
in six to 12 months or even longer. Late last week Paul
Bloxham, chief economist at HSBC, said Australian house
prices could tumble 12 per cent in 2021, as a U-shaped
recovery and COVID-19-related policies take their toll.
The Government has revised JobKeeper from costing
$130 billion to $60 billion. The good news is this means
Australians won’t have to borrow as much money to
cover the scheme.
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It’s for these reasons that many are saying if you are
thinking about selling over the next year or two, now
could be the best time to achieve the best result.
Selling now takes many of the above risks out of the
equation and enables you to sell with maximum certainty.
The alternative to avoiding the potential risks ahead is to
postpone selling your property for the next few years if
you are comfortable to do so.
The information is general information only, not financial advice, and does not take into account your individual objectives, financial situation or needs.