With so many varying forecasts about the future direction of the property market, I thought I would ask Paul Clitheroe of Money Magazine fame for his view.
Here’s his response below:
It is indeed an unusual time. Hope you and family are well.
My view is pretty common sense, in short form below:
Despite the COVID crisis restricting immigration and it seems some youngsters are delaying having a family, our population still grows. Across Bureau of Stats, Treasury and demographic forecasters, average prediction is for a population of around 35 million in a bit over 30 years (8.1 million in both Sydney and Melb) So demand will grow.
Interest rates will be low for yonks (a technical term). But income growth for the vast majority of the working population will be low. Add job seeker winding back, COVID in all probability being with us for longer than we hope, banks wanting to get repayments on loans sooner than later… you would not need to be Albert Einstein to figure downward pressure on prices. Right now the market is generally holding because of the factors I have outlined. Huge Gov’t support, very low interest rates, banks deferring loan repayment and things such as $10K from super… not to mention a majority are in front with mortgage repayments.
But jobs will disappear and may take a long time to come back, government support will reduce and in many cases peoples reserves will dry up.
- Don’t hurry, forced supply is likely to increase putting downward pressure on prices
- With time, buyers can be quite confident that a growing population and eventual recovery will see property continue to be a solid investment
- Be realistic about the level of personal debt and your own job security. Being forced out of your property by a job loss could be ugly in this climate
- Buy where a growing population puts pressure on prices. Buy near public transport, schools, hospitals, parks and a decent cup of coffee
- Do not believe anything an agent tells you. They are not your friend, they work for the seller only. Do your own research.