Will COVID Trigger a Property Market Crash in Queensland?

Property Market Crash

Demand is High Now But Will COVID Trigger a Property Market Crash in Queensland?

If you are a property owner in Australia, you’ve probably been watching for a property market crash since the COVID-19 pandemic arrived on our shores.  

Fortunately, the lowering of mortgage interest rates has significantly limited the impact of the decrease in population and price disequilibrium during the pandemic. This has created a strong sellers-market, with very favourable selling prices and clearing rates across the country.  

South East Queensland has experienced a particularly high demand for property, driven by interstate residents keen to escape lockdowns and capitalise on the opportunity to work from home in the Sunshine State. 

However, record property price increases have made it challenging for first-home buyers to enter the market. In addition, high levels of government debt is often a trigger for fear in the stock market, historically leading to economic depressions.   

The New Zealand property market

While impossible to predict with absolute certainty, there are market conditions and forecasts that are useful indicators of future economic changes.  

For example, it can be helpful to take a look at the situation in New Zealand. Both the Australian and New Zealand economy have been supported by massive government stimulus payments which effectively kept large sectors afloat during lockdowns. In addition, both nations experienced early success in containing COVID outbreaks and saw interest rates drop to record lows.  

The New Zealand property market has recorded a year-on-year house price increase of nearly 26%.  

In order to cool the housing market, new rules impacting property investors have just been announced, creating a less favourable tax environment for landlords or investors who sell up. This will likely act as a disincentive against property investing, thus stalling house price growth.   

How will COVID impact property markets in Queensland?

Australia’s property market is believed to be following the New Zealand one, albeit several months behind.  

While property tax changes don’t appear to be on the cards in the near future, APRA is likely to place restrictions on higher-risk lending (including lending with a high loan-to-value ratio or high debt-to-income ratio) in the near future.   

The best time to sell

Excellent house price growth and likely regulatory changes to slow the housing market in the near future mean now is the ideal time to sell.  

to find out how you can make the most of this opportunity.

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