Now’s not the time to be buying property, say experts

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DESPITE property prices in the ACT expected to fall by nearly 6.5 per cent, comparison site Finder says six out of 10 experts say now is not a good time to buy property.

Canberra property… values to fall 6.4 per cent.

The Reserve Bank of Australia has today announced a hold on the cash rate for the second consecutive month.

Finder said it asked e
xperts and economists how much they expected prices to dip by 2021, following recent predictions of a housing downturn due to COVID-19.

They report, using Core Logic figures, that 

Canberra is expected to experience drops of 6.4% per cent compared with, say, Sydney 10.2 per cent. In the ACT this represents a fall of $44,800 on an average price of $700,000.

Graham Cooke, insights manager at Finder, said with increasing unemployment and growing economic uncertainty house prices will slide over the rest of the year.

“Both househunter and seller demand has weakened in the last month as Australians hunker down to help stop the spread of coronavirus.
,” he said.

“It’s not just experts, we’ve also seen consumer sentiment about whether it is a ‘good time to buy’ drop from a peak of 60 per cent in July 2019 to just 42 per cent in April.”

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  1. I write to take issue with the article on May 5th which is headed:
    “Now’s not the time to be buying property, say experts”.

    Experts have been predicting the demise of the Australia property market for decades. However, the market has paid scant regard to such pontifications and moved forward undeterred.
    In saying this I am not seeking to play down the fact that we are currently dealing with a new environment and it is obvious “we are no longer in Kansas anymore”. However, like their predecessors, I would question if there is sufficient data for your experts to offer their conclusions. Of recent times we have all been exposed to wild claims with statistical models being developed with insufficient data and I wonder if this may be the case here.

    I suggest the article overreaches in terms of the conclusions for a yet to be proven premise. Of interest is the fact that the experts failed to address the fact that most buyers are also sellers, in the same market. The considered wisdom on this is that in such a case, whether prices are going up or going down, you are unlikely to be disadvantaged. So, the conclusion reached seems to be very narrow and expresses a one sided view of the transaction. For those that are just buyers, can we be so sure of price reductions? Some analysts suggest that if supply of new stock remains low, the market may rise in response to the enormous stimulus package from both Federal and State Governments. None of this appears to have been considered.

    The Finder conclusions bear closer scrutiny on several other points:
    1. Finder is not known as a source for analysis of the property sector;
    2. A review of the Core Logic site, the claimed source of knowledge by Finder, shows that the company has a more prudent perspective of the market.

    Having been in property sector for more than 40 years as a property executive and agent, I have been through many twists and turns, although this current period may yet prove to be the most “interesting”. As agents, we are the people who are at the “coal face”, dealing with buyers and sellers in the real world. Despite this experience I am finding it difficult to make predictions.

    While we are dealing with lower volumes of enquiry, the buyers who are looking are qualified and looking to buy now. But there are also fewer properties for sale, so the principle drivers of supply and demand are operating and we are finding that homes correctly priced are selling well. In fact, the Canberra market has proved to be more resilient than other capital cities. Recent industry data on auctions results, shows Canberra is enjoying higher clearance rates than it was at the same time last year, albeit at lower volumes.

    While your article could be perceived as seeking to present a negative assessment, my current experience is that the market is doing what the market always does. That is it appears unconcerned by the observations and commentary of mere humans.

    Michael Wellsmore
    Past President REIACT

    • One only has to looks at what happened in other countries around the world such as Ireland and the United States around 2006 – 2008, coupled with the fact that Australia has some of the highest levels of household debt ever seen in the history of the world.

      Indeed the property market may continue to rise (so far this has been fuelled by huge manipulation of interest rate coupled with foreign investment and other government initiatives such as negative gearing); but eventually it will come crashing down. It must.

  2. I 100 per cent agree with Michael. Specialists keep saying that the real estate market in Australia will go down. Now that there is a global pandemic, they are at it again. The truth is that the demand for homes, both new and pre-owned is still strong and will always be strong. Also, 2021 will surely see increases because those that tried to play it safe during 2020 will surely want to buy right after a vaccine appears and the state of the economy is visibly stabilised.

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