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. Banks have offered a large number of homeowners mortgage deferment support which is also scheduled to end in September.
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.
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.
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.
If you are considering selling, a campaign in the current market 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.