How Does a Recession Affect Property?
In June, Australia officially fell into a recession – the first in 29 years. A recession happens when the gross domestic product slips into negative. The March quarter was down 0.3%, with the June quarter expected to be worse following shutdowns from the coronavirus.
So what impact does a recession have on the housing market? A recession would normally cause forced selling, as people lose their jobs and cannot make mortgage payments. However, with banks deferring payments and the government providing stimulus such as JobKeeper and JobSeeker, there are currently very few mortgagee sales. As a result, properties are still holding their value.
Plus, buyer demand is still high, with realestate.com.au reporting that search activity is up 72.5% from the lows experienced at the end of April.
If anything, experts predict that a modest drop in prices may occur towards the end of the year.
But all property shouldn’t be lumped together. Different types of property and different suburbs will be affected in different ways.
It’s also important to remember that property does not have the same volatility as the share market during a downturn, and Australia in particular has historically fared well during economic shocks.
Here in Casuarina, Kingscliff and surrounds, we don’t expect prices to drop significantly, however if you are considering selling your property, we still suggest you do so sooner rather than later.
Take advantage now while prices remain steady and buyer demand is high.
Who knows what the future holds in the new COVID-19 world?
Contact us for a free no obligation appraisal if you are interested in discussing the sale of your property – or just interested in its current value.