The economic effects of COVID-19 have already changed the property market in Sydney’s eastern suburbs.
Over the next few months, they have the potential to create further uncertainty still. But that doesn’t mean we’re seeing the same property market that we saw during the Global Financial Crisis.
We look at how the two economic slumps compare when it comes to Eastern Suburbs property.
1. This is a very different economic situation
First, let’s be clear, these are very different economic conditions to the GFC. That global recession was caused by flaws in parts of the global financial system. This one is part of a global health crisis and is caused by a virus that has shut down large swathes of the economy.
Australia managed to shelter itself from the worst effects of the GFC. This time, with our hospitality sector, retail sector and other services industries temporarily not functioning, we haven’t been so lucky - even if healthwise we’re currently doing our best.
The fundamentals of our economy were strong going into the lockdown and our hope is that they’ll stay strong once we return to some level of normalcy.
We believe this is also driving some different behaviours from buyers and sellers this time around, compared to the GFC.
2. Some parts of the market remain strong
There is still some genuine interest in some properties, especially at the lower end of the Eastern Suburbs real estate market right now.
Here, first home buyers are a force, taking advantage of record-low interest rates, generous government subsidies and changed market conditions. They’re often competing with investors looking for a good deal. At the same time, there’s also low supply, which means that we’re seeing genuine competition on some properties.
3. We’re not yet seeing many distressed sales
One feature of the GFC was that we started to see distressed sales, as buyers needed to offload their properties and were prepared to take whatever they were offered. We’re hoping that won’t be the case this time around.
We say this for two reasons. First, we’re seeing unprecedented government support in the form of the JobKeeper allowance and other stimulus payments. Second, we hope the economy will bounce back - at least to some extent - when we get past the worst of the virus.
This is creating a different dynamic in the market altogether, with sellers waiting rather than offloading their properties.