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The discontinuation of JobKeeper subsidy is unlikely to affect property prices. Here's why along what you need to be mindful of if you are looking to buy property.
The resilience of the Australian property market has left many experts stunned. Not only has the property market bounced back but has also been experiencing a record surge in prices across the nation. All-time low-interest rates, government property schemes, and pent-up demand have contributed to a boom despite little or no change in existing and prospective buyers' income levels. Experts now expect that the discontinuation of JobKeeper subsidy is unlikely to put a dent in prices. Here's our take on what property buyers may expect.
Why the discontinuation of JobKeeper is unlikely to affect prices
Property prices are a result of demand and supply. Mortgage holidays and government support in the form of JobKeeper during the pandemic put a pin in distress sales – reducing the number of properties on the market. CoreLogic's recent March 2021 report states that listing numbers remain low, with advertised housing stock over the month more than 25 per cent below the five-year average. Demand, on the other hand, in the wake of low-interest rates and government property schemes, continues to strengthen, resulting in a spike in property prices. While the gradual winding down of mortgage deferrals may lead to some correction in supply, the discontinuation of JobKeeper is unlikely to impact prices because:
- Over the past few months, as the economy has begun to recover, businesses have reduced dependence on JobKeeper and streamlining their workforce.
- Wage subsidy receiving households are low-income households and are unlikely to plan property purchases; hence discontinuation in these payments is unlikely to affect the number of prospective buyers.
- Individuals looking to enter the property market are financially secure, haven't been affected by the pandemic and are therefore unlikely to be deterred by the discontinuation of either of the two subsidies.
- Interest Rates are going to stay low for a while.
- Government property schemes and grants will offer buyers impetus.
What does this mean for prospective property buyers?
The decision to purchase a property shouldn't be based on timing the market. Here's what you need to be mindful of while buying property.
- Ensure financial stability by maintaining steady employment and income.
- Stay atop your living expenses and practise financial discipline to maximise your borrowing capability as well as maintain a good credit score.
- Buy a property as per what you can afford to borrow.
- If you are entering the property market, don't set your expectations too high. If you can't afford to buy in your current locality, opt for a more affordable suburb and use rental income to offset current rental expenses.
- Rely on the professional guidance of a mortgage broker.
The mortgage market is complex and figuring out the right home loan may be very challenging. Lenders pay mortgage brokers upon the settlement of a loan, making their services usually free for borrowers. A broker will help scope the market on your behalf, compare your options, identify applicable government property schemes, and handle all your application paperwork. Engaging a mortgage broker is, therefore, the most straightforward approach to a hassle-free property purchase journey.
Reach us for the best way as per your circumstances.
The information is a compilation from various sources for your benefit and should not be relied upon in lieu of appropriate professional advice.