It is being fed to us on a daily basis that the world, post-COVID-19, is collapsing around us.
Unfortunately, some property market commentators seeking to get their name attached to a headline have been quick to predict that the housing market is going to crash. The first said the market would suffer a 10% decline in values. The next had to ratchet it up if they were to be recognised, so the decline was then predicted to be 20% and last week yet another analyst said 32%. Let’s face it, bad news prompts more discussion than good. However, not one of the analysts has referred to any data.
The COVID-19 pandemic has and will continue to adversely impact the market – particularly in relation to transaction numbers – there is no doubt about that. However, will it be as bad as the doomsdayers’ analysis says? Only time will tell. Nevertheless, what history has repeatedly demonstrated is that if we hear the negativity over and over again, then it becomes a self-fulfilling prophecy.
REINSW President Leanne Pilkington suggests that potential purchasers would be better served to follow the data rather than the headlines.
“Let’s look beyond the headlines, I consider the data released over the past few weeks and let it speak to me,” says REINSW President Leanne Pilkington.
The table below sets out the preliminary clearance auction results over the last three weeks.
Week ending 24th May
Week ending 17th May
Week ending 10th May
“It is interesting that the analysts who are now saying the market needs a ventilator, are the same ones that were previously saying we were in a boom when the market had 80% clearance rates. So, the way I do the maths, the distance between apparent boom and bust is 2.1%,” says Ms Pilkington.
“If vendors are selling, then the properties are clearly reaching their reserve. In fact, feedback from the REINSW member agents and auctioneers indicates that properties have been comfortably exceeding their reserve. As we know when demand outstrips supply property prices don’t tend to fall.
“We’re not seeing a lack of confidence with purchasers, quite the contrary. Sadly, the same cannot be said for vendors. Lack of stock could well be the issue for the market as purchasers are still keen to buy. Hopefully, that will turn around once vendors come to understand that the world hasn’t collapsed.
“Property is a long-term asset acquisition; it cannot be lumped in with share market volatility. You don’t day trade property! Importantly, shares don’t put a roof over your head – property does! Housing delivers one of the human necessities, shelter. It’s one of the first things we buy and the last we sell. In a market downturn, the discretionary expenditure gets cut first.
“We have seen over and over again, when the economy becomes unstable people gravitate to “bricks and mortar”.
“We cannot predict what will be happening in the housing market in six months’ time, but the data makes it clear, it is not collapsing around us right now.”
REINSW President Leanne Pilkington is available for comment.