With Australia’s softening economy, the negative employment impacts of COVID-19 and social distancing restrictions on real estate operations, Australia’s property market is predicted to take a huge hit in the upcoming months. As the government continues to update rules to prevent the spread of the coronavirus, here are a few more details about the tumbling Australian property market to keep in mind.
Prices to fall by up to 20%
Australian economists have predicted a 20% drop in Melbourne and Sydney house prices, due to shooting unemployment rates as a result of non-essential services and workers made redundant. At the Federal Government’s announcement of auction restrictions, the preliminary auction clearance rate dropped to 61.3% across the combined capital cities – almost a 20% drop from the previous capital city auction clearance rates last year at 80%. Large numbers of auctions were also withdrawn from the market in recent times due to uncertainty in property market values and increasing rates of unemployment even for existing homeowners.
On-site auctions and open house inspections banned
As a result of Stage 2 of the coronavirus outbreak lockdown, on-site auctions and open house inspections have been banned. As a result, buyers have been securing their properties before auctions and vendors, given the uncertain economic times ahead are also accepting such offers. Property sale onlookers are also no longer interested in the market, resulting in less competition and plummeting property prices and value.
What should you do?
Taking into account the long-term effects of auction and open house inspection bans as well as falling property prices, there are a number of things you can do to keep yourself afloat:
- Don’t panic and wait it out: if there is no pressing need for you to sell your property, simply wait a few years for the economy to grow
- Mortgage refinancing: an option available to borrowers usually 12 months after maintaining their original mortgage
- Mortgage modification: negotiate with lenders to modify any terms both you and your lender see fit in the context of current economic circumstances