Earn
Why distressed properties still sell at market value
Despite leading economists predicting a fall in the housing market once government support is withdrawn, a leading property researcher believes stock levels will have a greater impact on prices than owners needing to sell.
Why distressed properties still sell at market value
Despite leading economists predicting a fall in the housing market once government support is withdrawn, a leading property researcher believes stock levels will have a greater impact on prices than owners needing to sell.
Starting from Monday, 28 September, the Morrison government will reduce eligible payments from $1,500 a fortnight to $1,200 a fortnight.
This change is likely to impact up to 3.5 million Australians who are currently relying on JobKeeper payment during the COVID-19 pandemic.
In a conversation with Smart Property Investment, InvestorKit’s head of research, Arjun Paliwal, explained why distressed sales does not mean the property will sell for under market value, with stock levels being pivotal to values.
“There can be houses in Melbourne, Sydney, anywhere really, where someone may have a need to sell,” Mr Paliwal said.
“However, if there are many owners who aren’t selling, then the problems come down to stock levels.”
Mr Paliwal explained that an agent will work in the best interests of the client, with the potential buyers unaware that it is a distressed sale.
“People don’t actively go in wanting to sell at a loss,” Mr Paliwal said.
“They will still put in a campaign. They will still get agents displaying poker faces. They will still try to make the place look nice where they can.”
“As a result, if the stock levels are low, you might see a distressed sale, but they may not sell for cheap,” he stated.
Mr Paliwal urged investors who have been waiting on the sideline for prices to fall to actively watch stock levels, with a reduction likely to mean prices hold firm.
“I am not a believer in the September cliff for our house market across most parts of Australia.
“The unit market currently in Sydney, Brisbane and Melbourne pre-second wave were displaying spikes in listings that took new listings added per month above pre-COVID levels.
“With border closure directly impacting those markets, investors will see greater pressure to sell their properties at a cheaper price.”
“Across the housing market at a city level, [excluding Melbourne] the cliff is not showing. That is because listing levels remain lower or at pre-COVID levels not heightened above COVID levels, which would be the key indicator to look at.
“Over the next couple of months, if we are reviewing listing levels and where it sits in comparison with COVID, should they continue to remain low, then the cliff would not be showing for houses,” Mr Paliwal concluded.
About the author
About the author
Earn
More pain for the big 4 banks
Australian banks are confronting a protracted recovery from the COVID-19 economic downturn, which will hurt the big banks’ profitability, although strong credit buffers should protect the businesses...Read more
Earn
Government plans to name and shame super funds
Poorly performing superannuation funds have been put on notice and could be banned from taking new members’ money under changes flagged under the government’s “Your Future, Your Super” initia...Read more
Earn
Government ‘prioritising the wealthy’ with 6-member SMSF bill, says ACTU
The government’s six-member SMSF bill will exacerbate the misuse of superannuation “as a vehicle for tax avoidance and intergenerational wealth transfers”, according to the the Australian Counci...Read more
Earn
Almost half of investors want to bolster portfolio in 6-12 months
A new survey has found that almost half of Australians with property in their pocket are actively looking to expand their investment portfolio in the next six to 12 months. ...Read more
Earn
Big 4 bank hit with $57.5m penalty
One of Australia’s big four banks has been ordered to pay a total of $57.5 million for fees-for-no-service breaches. ...Read more
Earn
Melbourne CBD faces $110bn hit over next 5 years
Melbourne’s Central Business District could have its economic output reduced by up to $110 billion over the next five years as a result of the restrictions put on the region due to the COVID-19 pand...Read more
Earn
JobKeeper 2.0 legislation passed
JobKeeper 2.0 legislation has now passed both houses, extending the payment scheme for a further six months. ...Read more
Earn
Business owners to benefit from virtual event
MyBusiness, nestegg’s sister brand, is bringing together an impressive line-up of decision makers, dignitaries, business owners and mental health advocates over three half-days in September, as part...Read more
Earn
More pain for the big 4 banks
Australian banks are confronting a protracted recovery from the COVID-19 economic downturn, which will hurt the big banks’ profitability, although strong credit buffers should protect the businesses...Read more
Earn
Government plans to name and shame super funds
Poorly performing superannuation funds have been put on notice and could be banned from taking new members’ money under changes flagged under the government’s “Your Future, Your Super” initia...Read more
Earn
Government ‘prioritising the wealthy’ with 6-member SMSF bill, says ACTU
The government’s six-member SMSF bill will exacerbate the misuse of superannuation “as a vehicle for tax avoidance and intergenerational wealth transfers”, according to the the Australian Counci...Read more
Earn
Almost half of investors want to bolster portfolio in 6-12 months
A new survey has found that almost half of Australians with property in their pocket are actively looking to expand their investment portfolio in the next six to 12 months. ...Read more
Earn
Big 4 bank hit with $57.5m penalty
One of Australia’s big four banks has been ordered to pay a total of $57.5 million for fees-for-no-service breaches. ...Read more
Earn
Melbourne CBD faces $110bn hit over next 5 years
Melbourne’s Central Business District could have its economic output reduced by up to $110 billion over the next five years as a result of the restrictions put on the region due to the COVID-19 pand...Read more
Earn
JobKeeper 2.0 legislation passed
JobKeeper 2.0 legislation has now passed both houses, extending the payment scheme for a further six months. ...Read more
Earn
Business owners to benefit from virtual event
MyBusiness, nestegg’s sister brand, is bringing together an impressive line-up of decision makers, dignitaries, business owners and mental health advocates over three half-days in September, as part...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
