The family home, our most important financial asset
Australians love property. For 90% of Australians, the family home is their largest asset and primary source of wealth creation. Events that risk property values, such as COVID-19 are a legitimate source of anxiety for many households.
Property valuation services
There are a number of sources that provide online, automated property valuations based on the latest sales data. Rollit Wealth provides a free month-to-month property valuation service, as does realestate.com.au and a few of the banks, including St. George and ANZ.
Automated valuation models (AVMs) typically provide a confidence level which you can use as a guide. Ultimately, your house is worth what someone will pay for it. Consult your real estate agent for deeper insights into the market in your area.
Property market commentary
Below are a collection of articles that illustrate the lack of consensus from experts on the potential impact on property values. No one has a crystal ball!
savings.com, Alex Brewster - 20 March 2020
A new report has found a 'worst case' scenario for COVID-19 could have a devastating effect on house prices.
Investment bank UBS said if the pandemic continues into September and infects 16% of the global population at higher fatality rates, house prices could plummet by up to 20%.
However, a 'moderate' scenario, where infection rates peak in May and the virus is contained within the next six weeks, would see house prices rise 5%.
AMP Economist Shane Oliver said the fluctuation of house prices was dependent on how deep a recession there was and how far unemployment rises.
"A sharp rise in unemployment to say 10% or beyond risks resulting in a spike in debt servicing problems, forced sales and sharply falling prices," he said.
"This could then feedback to weaken the broader economy as falling home prices lead to less spending and a further rise in unemployment and more defaults and so on.
"This scenario could see prices fall 20% or so."
realestate.com.au / News Corp, James MacSmith - 2 April 2020
COVID-19 is impacting real estate, but it continues to operate with online open for inspections and virtual auctions.
The impact to prices in the short-term is unclear, but expect market conditions and prices to return to normal once the virus has passed.
This article has great information on how properties are purchased and sold during this period, including if you can still use removalists. It ends with a video from economist Cameron Kusher.
ABC News, Elysse Morgan - 21 March 2020
Safe as houses? In past downturns house prices have been resilient, but past performance is no indicators of future returns and COVID-19 is a different beast.
The impact on employment has been immediate, the job losses likely to be deep and sustained. While auction clearance rates were running hot 2 months ago, with job security at risk buyers might wonder whether it is going to be safe as houses this time.
General advice warning
Rollit Wealth provides general information only. You should assess whether the information is appropriate for you having regard to your objectives, financial situation and needs and consider obtaining independent professional advice before making an investment decision. If information relates to a specific financial product you should obtain a copy of the PDS for that product and consider that statement before making a decision whether to acquire the product. Roll-it Super Pty Ltd. ACN 611 756 140. AFSL Authorised Representative No. 1273703 of MSC Advisory Pty Ltd. ACN 607 459 441. AFSL 480649 (MSCA).