Cited from www.realestate.com.au/news
Researching the previous economic downturns, Australian property was certainly more resilient then others. For example the 1991 recession or the 2007 Global Financial Crisis 2007.
Yet the market was not immune to the hardship and downturn, and this time its will be unlikely be immune to this one.
THE BIG INFLUENCER IS CONSUMER FINANCE
Confidence drives a boyaunt market and dies when consumer confidence drops. This is evendents in the share market globally since Covor-19 has over taken the world. ANZ Roy Morgan Consumer Confidence Rating recortded a 30 year low falling 28.7% low since last week, Australians consumer confidence is now 17% lower then it was since 2008 GFC period.
Very liquid share markets are much quicker to react to bad news then the assest market, such as real estate. However the market sentiment lows will eventually creep into the residental real estate market.
PROPERTY MARKET WILL REACT
At the moment people are worried about the job situation, shut down of public venues, resturants, cafes, tourism, health and beauty salones. The health concerns of COVID 19 have sent peoples sentiments low.
This worrying have left buying and selling property last on the list of priorty, which could lead to the nose diving of demand on the property market.
It does not mean the property prices will go down, but the turn over of the property market could be much slower.
All this could be a challenge for the market, but we are dealing with a virus pandemic and not a global finacal crisis so hardship could be short lived.
TO KEEP CREDIT AVALIABLE THE RBA CASH RATE WILL STAY AT 0.25%
This month, the Reserve Bank cut interest rates to a record low has vowed to keep the cash rate at the current level of 0.25 per cent until progress is made towards full employment.
They are confident inflation will be sustainably within the 2 to 3 per cent target band.
Even before the onset of COVID-19, the RBA had made little progress towards full employment and underlying inflation had not been above 2% for four years.
Given this – and with unemployment expected to rise – it is likely that official interest rates will remain at 0.25% for an extended period of time to ensure credit is still available.
AT THE END OF COVID 19 TUNNEL THERE WILL BE LIGHT
Once COVID-19 is under control, the housing market is likely to be buoyed by a combination of record-low mortgage rates and the prospect that they will remain at these levels for some time.
In addition to this, a slowdown in property transactions in the coming months will likely create more pent-up demand for housing, which will burst once consumer confidence begins to sustainably improve and the housing market commences its recovery.
Overall, these factors should see a fairly swift rebound in property demand once the COVID-19 crisis has passed.