That’s a common question people are asking now that our real estate markets have been hit by the triple threat of:
- The Coronavirus Pandemic
- A recession
- Social and political unrest around the world
And with a second wave of Coronavirus now upon us, particularly in Melbourne, many are wondering if those dire predictions of 20-30% falls for our property markets that were made earlier in the year by those property pessimists are now going to come true.
The simple answer is NO – our property markets are not going to crash – in fact they’ve remained remarkably resilient.
Perspective is key through the COVID-19 crisis, and although Victoria and New South Wales are battling to contain a second wave of the virus, we can’t lose sight of the fact that Australia still has some of the lowest rates of death and infection in the world.
Our economy is also proving more resilient than those of our peers, and, barring a significant deterioration, should return to growth in the December quarter of 2020.
It wasn’t that long ago that the media was forecasting a property bust and that Australia’s housing markets could fall up to 30%.
This was predicated on the worst case scenario of a long drawn out COVID-19 pandemic and a deep world wide recession, but Australia’s property markets look like they’ll be in for a soft landing.
The worst case scenarios of Covid-19 racing through our national and killing hundreds of thousands of people just hasn’t occurred, but our response to the pandemic has pummelled our economy.
Yet despite our economy being in poor shape, housing price falls are likely be modest, and much smaller than predicted at the height of the COVID-19-related shutdowns earlier this year.
Of course there are two substantial downside risks to the property market.
- A significant second wave of Coronavirus infections would slow our economic recovery, but other than in Victoria, we seem to have the infection under control. And even Melbourne now seems to have its second wave under control
- There is a lot of concern that at the end of the current deferral schemes and government support packages Australia is going to fall off of a “Financial Cliff.”
Clearly the significant financial stimulus and support measures provided by our governments have kept the doors of many local business open and many people in their jobs.
So yes, our economy is on life support, but remember…the government and the Reserve Bank have clearly stated that they will do anything and everything they can to support our economy and minimise the impact of the coronavirus on businesses and our economy.
2021 is likely to be a year of economic recovery after a challenging end to 2020.