This is not a normal year, nor a normal property market cycle. While many people may want to sell in what they perceive as the traditional selling season of spring, we would urge you to consider selling in winter as it may be the best opportunity you’ll have all year. The current selling conditions are strong and it remains extremely hard to predict what may happen in the property market over the rest of the year. There are many economists predicting property prices will decline over the next year or so.
There are two basic fundamentals that drive property prices, supply and demand. Many suggest that supply will 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. Banks have offered a large number of homeowners mortgage deferment support which is also scheduled to end in September. An astonishing one-in-14 mortgages were put on hold in mid May — that’s 429,000 mortgages worth $153.5 billion; if you include other deferred loans, it’s 703,000 accounts worth $211 billion.
Many economists predict 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 potential over supply of properties available for sale.
The worst of the health pandemic may appear to finally be behind Australia but that hasn’t stopped concerns that the biggest economic impact could lie ahead. The factor that is causing most concern is that in September, an unprecedented amount of public and private sector stimulus measured in the hundreds of billions of dollars are due to come to an end. 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.
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 were 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.