76,000 Surplus Dwellings Seen To Dampen Housing Prices
With turnover rate expected to dwindle continuously for the next year, this seems to be the best time to buy a house as prices are and interest rates are expected to ease at an all-time low.
Lower property prices
Reports indicate that property prices are expected to drop by 5-10% in the next 12-18 years. This will bring thousands of properties in surplus. With fewer immigrants, which account for a large percentage of buyers in Australia is composed of immigrants.
As early as the impact of the pandemic hit the property market, the inflow of immigrants has already dwindled after nationwide travel restrictions were imposed. To make matters worse, an immigration ban was subsequently instituted in a hope of curbing down the Covid-19 infections.
READ MORE: Getting Home Loans For Builders In This Pandemic
Low turnover rate until 2025
According to a forecast from think tank FitchRatings, the immigration ban is likely to have a direct impact on the property sales across the country, which is likely to spillover in 2021. The same report estimated the impact to be more far-reaching, which can last until 2025.
With this, thousands of properties will remain unoccupied for the foreseeable future. Thus, the question as to whether buying a
property in this time of high uncertainty will be a good move begs for an answer.
Fiscal stimulus, lower rates
In a bid to easen up regulatory requirements for local banks and to somehow fuel economic activity, the RBA has released a fiscal stimulus package amounting to A$90 billion.
With this cheap loan that Australian banks can avail of, the government believes it will stimulate spending and ultimately help improve the economy as a whole. In effect, interest rates were seen to relax at a rate of 0.25 per cent in the coming quarters.
Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane. He's been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards - Pepper Money Broker of the Year – Specialist Lending.