Australia has taken an enormous financial hit, during our life-saving battle against COVID-19. We’ve all seen the news articles about the impending recession and record unemployment, and many of us are experiencing the fallout first hand.

But tucked in amongst it all is something that might seem like a little glimmer of hope, particularly to fortunate folks in stable jobs: a fall in house prices.

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Just last week, modelling released by CommBank predicted a possible 11-32 per cent slump over the next 2.5 years depending on the growth of unemployment. NAB recently predicted similar numbers: a 10 per cent drop this year, but up to 29 per cent if the downturn is “severe”.

Numbers like that may seem like a rare chance to get into the market, to secure a bit of much-needed financial security.

But is now really a good time to buy?

Here’s what the experts say.

How are housing prices being affected by the COVID-19 pandemic?

Right now, not all that much.

The CoreLogic Home Value Index results released earlier this month showed that Australian house prices were actually up 0.3 per cent in April.

Speaking to Mamamia, President of the Real Estate Institute of Australia, Adrian Kelly, explained why.

“There’s actually a shortage of supply at the moment — that is, new properties coming on the market —and that’s largely because a lot of people who would have put their property on the market are sitting on their hands and just waiting out this COVID mess,” he said. “But in most states, there was still plenty of pent-up demand [to buy]. So that’s what’s holding prices up.”

In other words, while there may have been 35 per cent fewer listings at the end of April compared to the same time a year ago, what was available was still being snapped up.

This is where the situation is likely to be different from major economic crises in the past. The Federal Government has provided huge economic relief packages (JobKeeper and JobSeeker) and banks have put a freeze on repayments for those in need, which means people are more likely to hang on to their homes.

“Forced sales or mortgagee sales and that type of thing will be minimal,” Kelly said. “Purely because property owners have the ability to hit the pause button on their mortgage if they’re in a bit of financial trouble.”

Will prices drop soon? And by how much?

Probably.

As UNSW economist, Nigel Stapledon, put it via The Conversation, “In the housing market, the bottom line is there will be a pullback by buyers and that will take momentum out of the market, and we could see some price falls”.

The most common prediction seems to be a 10 per cent (or thereabouts) drop in the short term. That’s nationwide. And of course, different cities and regions will be impacted differently. (Sydney and Melbourne markets, for example, are more reliant on overseas buyers and international students, and so are likely to suffer more while borders remain closed.)

Kelly stresses, though, that these numbers are best guesses. So don’t put too much stock in headlines crowing about a major slump.

“You could read 10 different reports and they’ll have 10 different opinions at the moment. And that’s because nobody really knows,” Kelly said. “All the information that I can give you is what’s actually happening on the ground at the moment, and that’s very different to a 30 per cent fall in house prices.”

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He believes May and June sales figures will paint a clearer picture.

“At the moment, all of the economists and all the banks are working on data which isn’t really accurate,” he said. “Property sales have a long lag time. From the time they come into the market, then they get sold and then they settle, can be 30, 60 or 90 days, in most cases. So the numbers that are being looked at at the moment don’t quite correlate with what’s happening on the ground.”

So, is now a good time to buy?

If you have a stable income, it could be.

“In this environment, buyers who are in very secure jobs are actually in an improved position because the overall market is weaker,” Nigel Stapledon wrote. “Coronavirus will take out a group of buyers – those adopting a wait-and-see approach or who are simply unable to buy due to reduced income.”

Kelly agrees, particularly if you’re looking in your own region.

“Provided the virus behaves itself, [the market] will come out of this okay. It’ll be like a V-shape type of recovery. So now probably is a good time to buy while purchasers in other states can’t go anywhere,” he said.

“Because, whilst we’ve been pretty good at adapting to technology with virtual tools, most purchasers aren’t going to spend hundreds of thousands of dollars without touching what they’re going to buy. That’s just the reality.”

But he urges caution against viewing the crisis as a chance to make a quick buck.

“In hard economic times, like the ones that we’re in, real estate always performs much better than shares, and that’s because real estate is a consumption commodity; everybody needs somewhere to live,” he said. “So that all that will certainly help our property market on the way through.

“But real estate should always be viewed as a long term plan, particularly in the current environment. Buying and selling in this sort of market to make a quick profit is probably not likely to happen.”

Again, it comes back to the unpredictability of the situation. This is an economic crisis driven by a health one; buyers (and particularly investors) need to be prepared for the possibility that things could change suddenly and dramatically in the months and years to come.

What else should someone consider before they buy?

Kelly advises people to first make sure they can still access finance, given some banks have introduced stricter lending criteria for people in high-risk industries, like hospitality.

“Someone who had a preapproval in place with a bank, say, eight weeks ago, may not have that in place now, but they don’t know it. So I’d be going back and getting that sorted,” Kelly said.

“And then, really, it’s just the usual considerations that happen in a normal property market; working out what you want to buy and where and why, and doing your research properly in terms of value.”

Of course, this isn’t a matter of ‘quick, everyone grab a bargain while you have the chance’. For most of us, signing up for a six (or seven)-figure loan and decades of repayments is a major life decision. Only you know whether you’re in a position to make it. Seek advice and do your research. Lots of it.

Read more about COVID-19:

• What you need to know about COVID-19 today, Tuesday May 19.
• ‘Waiting for Centrelink to call’: 15 women on how their finances have changed since COVID-19.
• The cost of keeping us safe from COVID-19 will be paid by Millennials.

To protect yourself and the community from COVID-19, remain in your home as much as possible, keep at least 1.5 metres away from other people, regularly wash your hands and avoid touching your face.

If you are sick and believe you have symptoms of COVID-19, call your GP ahead of time to book an appointment. Or call the national Coronavirus Health Information Line for advice on 1800 020 080. If you are experiencing a medical emergency, call 000.

To keep up to date with the latest information, please visit the Department of Health website.

Feature image: Getty.