It wasn’t that long ago that we were officially advised that Australia is in recession, but some people are wondering is it already all over, with spending increasing more jobs being created and homebuyer borrowing increasing.
Of course, the third quarter of 2020 finishes at the end of this month, but we won’t officially know whether we’ve had another quarter of negative GDP for quite some time.
And yes, there still is plenty of bad news out there, and there is more to come, there’s also lots of good news if you look for it.
But interestingly many of the property pessimists who predicted real estate Armageddon only a few months ago I’m now backpedaling.
At the time of the first lockdown in March this year, the Chicken Littles hit the streets, the airwaves and the internet declaring that the world as we know it was about to end.
Remember the story of Chicken Little and Henny Penney?
Chicken Little thought the sky was falling – but he was wrong.
A bit like the property Chicken Littles
Yes, it is true the picture looked bleak back them; some would say it still does.
The problem is fear is a very powerful emotion, and one that these people, these Chicken Littles, used to grab the media’s attention.
Unfortunately, these ‘Chicken Littles’ did nothing but cause chaos and deflate the financial dreams of their fellow Australians, all for the sake of a little publicity.
You see… when we look back at the property predictions made earlier this year by some high-profile economists as well as the usual tribe of property naysayers attempting to exploit the pandemic for publicity, you’ll find they were consistently wrong.
Well, today in my weekly chat with Dr. Andrew Wilson, Australia’s leading housing economist I’d like to discuss a new bad news forecast for Australian property by international rating house Fitch Ratings and see if he thinks that this is also going to be wrong.
He will also give us an update on the latest property data and some good news economic date.
Another forecast of house price declines.
This week one of the world’s major credit rating agencies- Fitch Ratings – forecast Australia’s house prices are set to decline by 5%-10% over the next 12 to 18 months, as net immigration weakens sharply.
Fitch explained that immigration had already been slowing prior to the outbreak of the pandemic, but has plunged since the health crisis led to strict controls on international travel.
The Australian government in May predicted that immigration would fall by 15% in the year to June 2020 (FY20) and by a further 85% in FY21.
This would represent a fall of almost 200,000 permanent arrivals in FY21 relative to FY19, and mark the lowest level of net immigration since June 1993.
It’s interesting to see Fitch’s Australian house price forecast in January 2019 They said:
“Australia will see the world’s biggest house price declines this year, according to one of the world’s major credit ratings agencies, which declared homeowners would have to wait until 2020 to see any recovery.”
In contrast Westpac recently released an upbeat forecast for house prices in the next couple of years and just like the CBA has backtracked from it’s more pessimistic outlook and predicts house prices rebounding from mid next year.
There’s been some encouraging economic news lately.
- The ANZ Roy Morgan Consumer Sentiment Index has increased for the third week in a row
- The Australia share market has signalled improved investor sentiment
- The Australian dollar remained strong reflecting firm local economic prospects
- The labour market rebound is encouraging as the national jobless numbers fell sharply
This week’s property data provided by Dr. Andrew Wilson of My Housing Market
Watch our video As DR Andrew Wilson gives his commentary on the follwoing data:
Auction clearance rates
Auction clearance rates remain firm in Sydney last weekend.
However with Melbourne in lockdown and auctions now being held on line, many properties originally scheduled for auction have been withdrawn and these are classed as non-sales creating a much lower clearance rate than normal.
Newly listed homes for sale:
Fewer homes have been coming on the market for sale over the last week, particularly in Victoria.
Watch our video as DR Andrew Wilson gives his commentary on the following charts:
New Sales Index:
Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on
If you’re wondering what will happen to property in 2020–2021 you are not alone.
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