Since the start of the pandemic in 2020, the clock has ticked, and things have changed economically – mostly in the real estate sector. According to REA, 2021 has brought with it a different wave in Australian residential real estate. Due to the pandemic, the government offered financial support and government stimulus in the form of incentives, which in turn have pushed the mortgage rate to a record low, thereby increasing the number of first-time buyers in the property market – mostly because of the low borrowing cost. This has come with some challenges in the property market. In this article, we shall talk about the challenges the property market is likely to face even in the post-pandemic period.
Weakness in the CBD market
As the pandemic continues to strike, mobility in the urban areas has been highly restricted. This means that the business district is restricted, no students attend school, tourist visitation will remain very low, and no workers will be working in offices. People are used to working from home, and bringing them back to the city will take time. The overall effect will be slow growth in urbanisation.
Property demand from buyers
While the borrowing cost remains lower than ever, and the government continue offering incentives, more buyers will dive into the market. This will increase the demand from buyers who are looking for a less CBD-centric working life, which will inflate property demand in more rural and regional areas.
Investors will re-enter the market and squeeze out first-time home buyers.
Although investors have been silent for some time, leaving the first-time buyers in the market, easy lending restrictions, high saving rates, and low-interest rates are likely to force investors to re-enter the market.
Property prices will continue to rise
The low-interest rates, consumer confidence, favourable supply, investors re-entering the market, and the increasing demand ratio will cause the property prices to remain high even after the pandemic. However, this is coupled with low employment and under-employment rates from lower-income households, which will increase the disparity of home ownership, weighting it towards high-income earners.
It is no surprise that the Coronavirus pandemic negatively impacted the employment sector. Due to mobility and quarantine restrictions, many people lost their jobs in industries such as hospitality, tourism, and education. Depending on the impact of the vaccine, the unemployment problem is likely to continue in the near future, which will impact the ability of Australians to purchase properties.