All indications lead us to believe that property prices are heading for a rapid decline following the COVID-19 pandemic. However, these predictions might not actually be the case.
Post-pandemic property price predictions are something that dominates the thoughts of many Australians at the moment. The question of which direction prices will move has yet to be answered, despite popular perceptions.
Indeed, the majority believe that prices will fall sharply, with the major Australian banks estimating a 10% drop over the next six months. Commonwealth Bank’s analysts put this price decline down to weak market sentiment, increased unemployment, a reduction in immigration, and the continuation of social distancing measures.
However, there is a significant issue that leads one to consider the possibility that Australian property prices could continue to rise. Throughout the lockdown caused by the COVID-19 pandemic, everyone had to adjust their spending habits.
Bars, restaurants, cinemas, and other regular sources of expense were closed. Annual holidays and weekend breaks, too, had to be curtailed. Paradoxically, many Australians find themselves with three or four months worth of cash that they usually would have spent. For many people, this is a considerable amount of money, cash that could be put down as a deposit to buy a new property. This ‘rebound spending’ could have a rising price effect on property
Of course, it is generally the better-off people who have the disposable income to spend. So, it is the same people who will have saved most during the pandemic. For regular folk, daily living expenses will not have changed, and they may not have been in a position to work from home, so their steady income may have been affected.
For these people, along with many other Australians, a property market price reduction would be welcome. Thousands are waiting for prices to reduce enough for them to get the opportunity of home-ownership finally. The post-pandemic property predictions, for these people, are a sign of hope.
There is a risk that the property market defies the predictions and continues to rise, keeping property-hungry Australians out of the market. It would not be the first time that Australian property prices had bucked the trend.