Is the Property Market Heading for a Crash

In Professional help by Jeff OsborneLeave a Comment

Is the property market heading for a crash?

Many people around the country will be asking themselves what is the ‘worst-case’ scenario for the housing market?

No doubt, we can expect many a media / sensationalist headline proclaiming impending doom in the market, which will unnerve many. Whilst values may slip in the short term, it is important to remember that it is likely only those who have to sell that will sell.

There are several key factors that we believe will drive this:

                • The cash rate is at historic lows. Today, you can secure a fixed rate home loan for investment product at 2.59% for 3 years with NAB, whilst rental yields for a lot of product is at 4%, if not 5%, 5.5% or even 6% in certain suburbs. Therefore, it is incredibly easy to hold onto property today – meaning sellers likely won’t be forced into selling.

                • There will be some landlords who have tenants that may have reduced income for a number of months, but many banks have already introduced ways to combat this with a range of measures including the option to pause your home loan repayments for a number of months if you are experience hardship to help you get through this short window of an economy affected by Covid-19.

                • Whilst many investors will look to offload shares in the volatile share market, many will be drawn towards residential real estate given its relative stability and stronger returns compared to returns on cash in the bank.

                • Residential property serves a very real purpose – it is a roof over our heads. For most Australians, their house would be the one asset they would fight to hold over any other. It is not only an investment; it is a home.

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