TASMANIA, Australia – Home-owning dreams are currently on hold as the Tasmanian property market braces the impacts of coronavirus pandemic.
Not only in Tasmania, but the property prices all over Australia is going down. According to economists, the country’s property prices could dip down to 20% as the national unemployment rate increased to 10%.
And while the property market in Tasmania has risen sharply, rebelling against the national trend, the industry sends warning that challenging times might be coming ahead.
Mark Berry, the chief executive of Real Estate Institute of Tasmania, stated that the state’s housing market is starting to plateau following its massive price increases. He expressed his warning that property prices may be going to slow down and that he hasn’t seen any increasing trend in the industry for the last quarter. However, he also said that there is currently no indication that the bubble will burst anytime soon.
Mr Berry explained that Tasmania is bracing for the tumble and will still have enough protection from the downturn. He said that in the state, there are still significant numbers of home buyers compared to the number of properties currently for sale.
Based on his sources, there are still under 12,000 properties that are currently in the market in Tasmania, he said. The state’s property market is coming from a low level based on the number of houses listed for sale, so Tasmania still has protection for a considerable time.
However, Mr Berry said that getting a home loan may be another matter entirely. He said that the struggle is affecting more than just the first home buyers.
Mr Berry stated that he already hears complaints from investors about getting investment loans have become more difficult. He said that the primary reason for these loan issues is the current uncertainty hanging over the rental side of the business.
One young couple in Tasmania also expressed their dismay about the struggle of getting their home loan approved amid the coronavirus outbreak.
Thomas Edwards and Ella Ross said that they were to purchase a property for their first house. They found one located around the southern part of Tasmania. However, they have to put their plans on hold because of the virus pandemic. Ms Ross explained that their budget for the property wasn’t too high, with them being students and only working part-time. However, she said that they found a property within their price range and had a design done.
Mr Edwards, 22, is working as a barista while Ms Ross, 23, is a teacher’s assistant and works at a seaplane tour company.
According to them, they initially had no issues getting for a home loan from the bank. However, the casual workers said that they experienced problems applying for mortgage insurance when the COVID-19 pandemic hit. They need insurance to secure a home loan from the bank.
Ms Ross stated that the mortgage insurance company they were applying with said that they, unfortunately, couldn’t count on casual work at this time. Their application was declined, which led the couple to halt the purchase of the property and move back home.
Meanwhile, Airbnb properties in Tasmania are switching to rentals amid the coronavirus pandemic. It is another significant change in the real estate market in the state, with a wave of Airbnbs now going into the rental market scene.
According to the spokesman from the Property Council of Tasmania, Brian Wightman, Tasmania has long had a shortage of rental properties. However, with the shakeup in the property market due to the virus outbreak, there is more opportunity for more real estate to enter the rental scene.
Also, the State Government announced relief to help boost small businesses. A raft of economic support is available including concessions for businesses on electricity and water bills and relinquishing land tax for the 2020-21 period as part of its response to the ongoing health crisis.
Mr Berry added that during the past three weeks, there are more than 200 Airbnb properties converted into either lodging or long-term rentals. He further stated that there are around two-thirds of these real estates located in the southern part of Tasmania while the other third is around the North West Coast and Launceston.
Mr Berry also said that with the wave of Airbnbs getting into the rental market, it shows that property owners are looking for ways to leverage on the market. They still have home loans they need to pay and right now, they can’t rely so much on the tourism market, he said.
Tasmania’s vacancy rate remains extremely low, so owners and tenants continue to look for more properties, said Mr Berry. And while this move may be good at the moment, it’s not saying that the same sentiment will continue tomorrow with the market and the economy changing quickly right now.
Meanwhile, for those currently struggling to repay their mortgages due to coronavirus pandemic, Australian banks are offering an option for borrowers. They can now opt-out of paying their mortgages for up to six months.
This offer from banks is part of their efforts to help ease the financial pain that most Australians are experiencing right now, especially with more people losing their jobs to the health crisis.
The four major banks in Australia, ANZ, Commonwealth Bank, National Australian Bank, and Westpac are now offering coronavirus home loan support. Smaller banks are also providing deferring of home loan repayments with some fees waived, including Suncorp, Macquarie Bank, Bank Australia, St George, Bank SA, Bank of Melbourne, Bendigo, and Adelaide Bank.
Each bank comes with its eligibility criteria for the home loan support for their borrowers. But in most cases, it applies to all Australians who lost their employment or source of income due to the coronavirus health crisis.
But while deferring home loan repayments may provide relief for those who can’t pay their mortgages right now, there might be some consequences.
Although there is a delay in repayments, there is no mortgage holiday. It means that the principal loan amount will still accrue interest during the deferral period. More frequent or an increase in home loan repayment may be necessary after the six months deferral period.