“COVID-19 is testing us like we’ve never been tested before.” – Josh Frydenberg.
It’s evident that many Australians share the same view as Mr Frydenberg and feel uneasy about potential health implications and what the future may hold.
What we know right now
- The biggest threat to home values is the consistently increasing unemployment rate
- Job loss has been largely prevalent in industries dominated by renters (i.e. hospitality staff and retail assistants)
- Uncertainty about the future will arguably restrict the growth of the economy
The biggest economic threat to home values is the rising unemployment rate as the banks require a steady and reliable income to qualify for a mortgage.
Latest figures show unemployment was at 7.4 per cent in June, this is the highest level in more than two decades.
Most of the job losses have been in industries that are dominated by renters and that’s why we’ve seen a more significant impact on rental values.
Rental Demand and Current Property Prices
The reduced influx of migration and the mass departure of international students has also impacted rental demand, particularly in Melbourne and Sydney.
However, property prices have increased this year in certain areas that have felt fewer effects from the COVID-19 outbreak.
Latest industry figures from CoreLogic
Between May and August, home values largely dipped:
- -2.1 per cent in Sydney
- -3.2 per cent in Melbourne
- -0.9 per cent in Brisbane
Though, in Canberra and Adelaide, results were more positive with increases of 1.3% and 0.3% respectively.
Homeowners with mortgages who have lost their jobs or have had their hours reduced were provided with options to assist them, such as mortgage deferrals, early withdrawal of super, JobKeeper and JobSeeker.
Modern technology has been the key to sustaining a large part of the workforce as millions of people had the resources to work from home.
What we expect to see in the property market moving forward
In the past, you might be surprised to learn that property prices have actually gone up during periods of rising unemployment.
Australia’s big cities and regional markets have a history of strong resilience from difficult economic and unforeseen natural events.
Therefore, the property market requires a long-term outlook rather than short term judgement, as we have witnessed its capabilities over and over in history.
Consult the help of the professionals
If you’re looking to move, upsize, downsize or find the right rental for you, Elanora Realty is here to help you on your journey.
With extensive knowledge of the local Gold Coast area, we are able to provide expert advice from our 20 years of industry experience.
Get your foot in the door and reach out to Elanora Realty today and we’ll help you on your way to achieving that unbeatable new-home feeling.
