Buyer’s reduced access to credit due to lender policy restrictions brought about by COVID-19 is likely to lower demand and potentially lead to property value reductions.
However, the potential for the creation of a buyers’ market is highly likely, according to property experts.
They have urged buyers to do their research, plan their financials and negotiate aggressively, as the COVID-19 pandemic continues to impact the Australian property market.
RiskWise Property Research CEO Doron Peleg said Australia’s significant economic downturn and high unemployment rate would lead to a sharp reduction in house prices and low auction clearance rates.
“In the immediate term, particularly during the June quarter, we are expecting to see far fewer properties on the market across all states and territories and house prices to take a hit,” Mr Peleg said.
“While it is tough times for sellers, buyers will be well positioned to negotiate aggressively, depending on the quality of the property and the vendor’s financial position.
“The current market conditions are temporary, though. Those who can hold on to their property through this period should do so, as we expect to see a very strong reduction in supply, especially in new, high-quality listings.”
However, while there appears to be opportunities for buyers, the biggest challenge will be finance.
Bushy Martin, founder of KnowHow Property Finance, said the banks’ COVID-19 lender policy restrictions would reduce demand and constrain the market.
“Most banks have introduced temporary lending suspensions preventing people employed across tourism, hospitality, retail, entertainment and other industries from being able to borrow, and this will ripple even further as the economic impact of the pandemic deepens,” Mr Martin said.
“In these circumstances, potential buyers who can jump the financial hurdles and pessimistic property valuations from the banks will be well positioned to negotiate and maximise the looming buyers’ market.”
Mr Martin said COVID-19 had created a ‘perfect storm’ for educated buyers with the negotiation skills to navigate their way to the best available deals.
“Preapproved buyers armed with the latest, comprehensive data will be well positioned to establish their preferred price, but it will also rely heavily on their ability to negotiate and manoeuvre the selling agent, who plays an important role in protecting and presenting their client’s interests.
“The longer the pandemic restrictions remain in place the more pressure we’ll see put on sellers, which will swing the pendulum further towards savvy buyers.”