Ray White Now | Updated weekly Ray White Now | Vol 3 - 1 June 2020 | Page 10

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.
New data out this week shows property prices remained
very resilient across the country in May. Nationally
prices fell for the first time since June 2019 – but only
fractionally at -0.4 per cent. Confidence has taken a hit,
so too household incomes, as well as population growth
with the closure of our international border.
In good news, RBA governor Philip Lowe last week
revealed the unemployment and the economic downturn
had not been as severe as anticipated. He’s told the
government to keep the $60 billion in savings from the
JobKeeper program to perhaps finance more tailored
spending in a few months.
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.
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.
Meanwhile, the banking regulator has warned against a
“dangerously naive” assumption of an economic snapback.
APRA chairman Wayne Byres has put the banks
on notice, saying the “real battles for the financial sector
remain ahead”.
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.
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The information is general information only, not financial advice, and does not take into account your individual objectives, financial situation or needs.