Will the end of JobKeeper derail the housing boom?

With JobKeeper, loan repayment deferrals, rental moratoriums and other COVID-19 support measures about to end, how will the housing market, which is performing well nationally, be affected?

The answer is that it will likely have minimal overall impact on the housing market, according to experts, including realestate.com.au Chief Economist, Nerida Conisbee. However, while Ms Conisbee says there is no “looming fiscal cliff” which she says would have been the case had support measures been cut back in September as originally planned, there is likely to be an impact on some people and certain parts of the property market, the rental market in particular, albeit not as severely as it would have in September.

Overall, our recovery has been faster and much stronger than expected, thanks to the support measures combined with record low interest rates, strong buyer demand and low stock levels.

“We can see that the economy is well on track and the conditions are very strong at the moment,” Ms Conisbee said.

At the start of the pandemic, experts predicted that we would see falls of up to 30% in house prices, however property prices have defied those predictions. In fact, the REA Insights Home Price Index report showed a 5.9% rise in national dwelling values over the past 12 months.

Now a number of economists have forecast price growths of 5-10% between now and the end of next year, some even predicting a sustained boom with growth as high as 20% by the end of 2022. All in all, the stronger than anticipated momentum in the housing market combined with our faster than expected economic recovery is expected to offset the cessation of support measures.

Two factors that would make a difference to house prices is an interest rate rise and finance restrictions. However, the RBA has ruled out a rate rise before 2024 and regulators are keeping a close eye on lending standards.

Real Estate Institute of Australia president Adrian Kelly said house prices were rising because demand was far outstripping supply.

“There’s an awful lot of people who’d like to sell but they know they can’t find something at the other end to buy. That’s our supply problem, but that will start to correct itself later in the year most likely.”

CBDs will face the greatest challenges moving forward in 2021, however, other than Melbourne, which Ms Conisbee says faces the greatest challenges due to prolonged lockdowns, other CBDs in Australia are expected to recover relatively quickly, albeit not as quickly as the suburbs and regions.

Post by ShelMarkblog 26 Mar 2021 0