The legal and economic effects of coronavirus have had an impact on the property market. Social distancing restrictions have made open inspections and in-person auctions impossible. The results: prices are down, and sales volumes are down, as home owners take their properties off the market.
This is certainly not good news for current home owners, especially for who had been planning to sell. But first-home buyers have been put in a position to buy properties that just a few short months ago would have been out of reach.
Before the coronavirus hit, the Australian property market was growing rapidly, with Melbourne house prices up 12.5% year-on-year and Sydney house prices up an incredible 14.5%.
Introduced in January, the First Home Loan Deposit Scheme reduced the required deposit for non-guardian loans to 5%, from 20%. This scheme opened the door for new buyers and the market benefited. That was, until coronavirus hit in a big way in March.
No one knows exactly what the long-term effects of Covid-19 will be on our economy. We do know, however, that growth in the South Australian market, a market which is known for being robust, has completely stalled and is now in decline by 1% for March. That’s a total change in growth month over month of -3.5%.
Yet, those with a secure job, and a deposit saved could have incredible negotiation power in property market in upcoming months.
Low interest rates
Home loan rates have never been cheaper with rates as low as 2.29% the cost of borrowing may become more and more attractive in comparison to the cost of renting.
Sellers more willing to negotiate
UBS Bank is estimating that house prices may fall anywhere from 5-20% as a result of the pandemic. While many sellers can afford to pull out of the property market and wait for better conditions, those who remain are likely anxious to make a sale. This can give first home buyers negotiating power – and help them pick up a bargain.
First Home Loan Deposit Scheme still available
The government scheme is still in operation during the coronavirus, in fact, in many ways it has been improved. The government response to the outbreak, in regard to the property market, has been to double the time frame for finding a home from 90 to 180 days, putting first home buyers in a stronger position than they were previously.
Job security remains key
While this is an opportunity for some, job security may cause many to miss out. Employment is paramount, and right now unemployment rates are high, and set to increase with time. First-home buyers who are confident in their job security should get their finances organised now. This will put you in the position to buy into the property market at its most affordable point in the foreseeable future. With confidence in your budget, many agents refusing to book a viewing unless you have pre-approval for finance, auctions happening less, and sellers desperate to sell. Now is the time to be ready.
To get ready, contact Finance Mutual Australia at
08 8216 4111
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