Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

 

 

Earn

Why distressed properties still sell at market value

  • October 02 2020
  • Share

Earn

Why distressed properties still sell at market value

By Cameron Micallef
October 02 2020

Despite leading economists predicting a fall in the housing market once government support is withdrawn, a leading property researcher believes stock levels will have a greater impact on prices than owners needing to sell.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

Why distressed properties still sell at market value

author image
  • October 02 2020
  • Share

Despite leading economists predicting a fall in the housing market once government support is withdrawn, a leading property researcher believes stock levels will have a greater impact on prices than owners needing to sell.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

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. 

Advertisement
Advertisement

“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.

Why distressed properties still sell at market value
Why distressed properties still sell at market value
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

About the author

author image

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

more on this topic

more on this topic

From the web

Recommended by Spike Native Network

More articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.