Real Estate

Sales still strong with robust enquiry levels

FORECASTS of housing prices dropping as much as 30 per cent are highly questionable, says the Real Estate Institute of Australia (REIA).

Agreeing with the REIA, John Owsnett of Professionals Padstow, said sales this quarter had been similar to those of last quarter and prices had not dropped significantly in this area.
President of REIA, Adrian Kelly said: “We are in unprecedented times and anyone that suggests they can forecast with any acceptable degree of probability is being highly fanciful.
“We can only look at what is happening in the marketplace at the moment as well as in previous times of high unemployment to provide pointers to likely outcomes.
“Currently we have a situation where listings are decreasing yet the enquiry level from prospective buyers is increasing. It is simple economics that when supply decreases and demand remains, that prices edge upwards. They certainly don’t drop.”
He says the Housing Industry Association is expecting building of new dwellings to fall by almost 50 per cent over the rest of 2020 and into 2021.
“This does not suggest a scenario of supply exceeding demand – a prerequisite for falling prices,” he said.
“While it is expected that higher levels of unemployment will provide a constraint on house prices, the anticipated levels of around 10 per cent have been experienced before and we should look at what happened to housing prices then.
“In the early 1990s we had a sustained period of unemployment above 10 per cent yet median prices remained stable. It needs also to be remembered that in ‘the recession we had to have’ interest rates for home loans were around double what they currently are.
“I do not believe that this points to a catastrophic outlook for house prices.”
For more, contact John on 9771 4555 or 0417 000 045.