COVID-19 and the property market: Is now the time to buy, sell, refinance or renovate?
Written By Kylie Hughes
April 21, 2020

Like everything else in the world, the Australian property market is in a state of uncertainty due to the coronavirus pandemic and its economic shockwave. Rightly so, if you’re in the process of buying, selling, building, renovating or refinancing a home, you’re very likely asking yourself if now is the right time. We explore that real estate question and more.

How will coronavirus affect property prices in Australia?

If the economy goes into recession, which is predicted, the downturn is expected to ripple across the housing market. Historically speaking, demand for property generally goes down during a recession because there are less people in a position to buy. With less people competing for properties, this causes overall home prices to go down. Prices can also be pushed lower by financially stressed sellers rushing to “cash out.”

Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP Capital, predicts that “a relatively short recession that sees unemployment rise to around 7.5% would likely only set property prices back around 5% or so, after which prices would bounce back. But a deeper recession with, say, 10% unemployment risks tripping up the underlying vulnerability of the housing market around high prices and high debt levels. This could see a 20% fall in prices.”

The only thing that is for certain is that the housing market is incredibly complex. In addition, you also need to consider your goals. Are you taking a a long-term, 30-year view or looking for quick investment returns? Are your goals only financial or do you have other objectives in mind?

What will happen to the value of homes in my area?

To understand the effect of the current market conditions on your home value, or the home you’re thinking of buying, it’s best to speak with a local expert. Keep in mind that real estate agents can’t be relied on to be totally impartial (they want to sell houses!), so it pays to invest some of your own time doing research using online research tools:

  • Online property databases, and allow you to search by postcode, street name, property type, number of bedrooms and so forth. You can save searches and build up a property portfolio for comparison reasons.
  • Domain’s suburb profile tool offers further analysis to help potential buyers better understand the lifestyle factors affecting that suburb.
  • Historical market reports offer an insight into how quickly or slowly properties are selling, whether they are selling via private sale or auction and keep you abreast with market trends and forecasts, information that can be vital to helping you decide the best time to sell or buy. Check out Real Estate View and Domain Property Profile.
  •’s neighbourhood overview tool calculates annual growth, medium rental yield and rental demand. This is particularly useful if you are looking at an investment property.

How many properties are for sale in your area? How long are they staying on the market? How many buyers are registering for auctions? What is the auction clearance rate? Is there a significant gap between asking and selling prices?

However, before you rush to the internet, consider the following points:

Firstly, when you read about housing market predictions, be mindful that Australia doesn’t have one housing market, it has many. In some cases, there are even micro markets within sub-markets, such as highly desirable streets or school zones that elevate property prices. Individual properties can also have characteristics that make them more desirable.

Secondly, for most home owners, property is a long-term proposition. If you’re not planning to sell soon, the current market fluctuations may have little bearing on the long-term performance of your home value.

Thirdly, a home’s true value is more than it’s market valuation. It’s a place to live, work, to be creative, to entertain in, to live near friends and family, or far away, to raise a family in, to be near the beach or close to the city or nestled in the hills. In other words, there are many more considerations than price alone.

Can I still sell my home during the coronavirus pandemic?

There are no legal or regulatory reasons that stop you from listing your home for sale. But do keep in mind that social distancing measures have resulted in a ban on in-person auctions and open inspections.

Real estate agents have responded by offering virtual tours of homes, private inspections and online auctions.

Should I go ahead with my home renovation project?

Now that we’re all living the ‘iso life,’ you might be looking around your home and noticing DIY or renovation projects you previously put off. Or perhaps you already have tradesmen lined up to start on a home improvement project.

From a property value perspective, it’s always prudent to ask yourself if it’s a project that will appeal to future buyers. According to Domain, kitchen and bathroom updates tend to offer the most bang for your buck. On a smaller scale, Domain also says that painting, landscaping and general maintenance also offer good returns.

If your project involves using tradesmen or contractors, check your local and federal health authorities for social distancing regulations in your state. At the time of writing, residents are allowed up to two visitors who are not ordinarily members of their household and tradesman are permitted.

Can I even get a home loan right now?

If you’re currently earning an income and working in a secure job, your loan application will be considered. According to our MyBudget Loans team, they are submitting loan applications for our clients daily. All of the banks, and most home loan lenders, are processing them.

That being said, loan assessment requirements have recently tightened and may change again in the near future. The only way to tell if you’ll qualify for a home loan is to chat with your bank or broker.

Is now the right time to refinance my mortgage?

If you’re a MyBudget client, our lending specialists will help you work out if you meet the requirements for a home loan using current criteria across a range of different lenders. We can also do a home loan health check for existing borrowers or a first home loan assessment for new borrowers.

For MyBudget clients, all of these services are free via our ethical lending team at MyBudget Loans.

As well as offering market-leading mortgage rates, the MyBudget Loans team specialises in products for borrowers who might be rejected by their bank. On average, we’ve been saving clients who refinanced (and/or consolidated other debts into their mortgage) more than $400 a month compared with their previous payments.

I’ve got numerous debts—should I try to get a debt consolidation loan?

With official interest rates at a record low, now may be a good opportunity to consolidate multiple debts into your mortgage. A debt consolidation loan may save money, free up cash and reduce stress.

However, debt consolidation is not without its risks. MyBudget clients are encouraged to speak with the MyBudget Loans team. Members of the public are recommeneded to start with a free budget consultation to get a detailed picture of their overall financial position and all of their options.

I’m a mortgage holder—what will happen if the value of my home drops below the value of my mortgage. Will the bank expect me to take out mortgage lenders insurance? Can they repossess my home or ask me for more money?

Current mortgage holders would not be expected to take out Mortgage Lender’s Insurance (MLI) in the case of their home value falling below their home loan balance. MLI would only be required in the case of refinancing which, in this circumstance, would be a moot point since the value of the property would be less than the amount needing to be refinanced. The refinance application would be rejected.

Likewise, if you have an existing loan, your lender would not ask you for a lump sum payment, as long as your loan repayments are up to date.

Generally speaking, a lender has no right to repossess your home unless your mortgage is in default. The lender must also serve you with a notice that gives you time to rectify your payments. Repossession is generally a last resort and a protracted process.

If you are finding it difficult to make loan repayments, you should contact your lender immediately to request hardship arrangements. Lenders will generally try to help borrowers work out a payment arrangement that avoids repossession (see below).

What if I can’t keep up with my mortgage repayments?

All of the major banks – ANZ, Westpac, NAB and Commonwealth Bank – have responded to the current crisis by making changes to their interest rates, and all have announced that customers affected by the impact of coronavirus will be able to pause their home loan repayments for up to six months.

If you’ve lost your job or had your income cut, please read this checklist.

There are also a range of banking relief measures for business customers, as well as numerous other programs designed to provide financial relief during the coronavirus pandemic.

If I apply for hardship now, will it affect my credit score and ability to refinance later?

The Australian Banking Association (ABA), with 22 member banks across Australia, has announced that your credit rating will not be impacted if you are approved for a six-month pause on your home loan repayments due to the pandemic.

Missed loan repayments would normally be recorded on your credit file. However, the ABA has reassured borrowers that these records will be not be passed onto credit scoring agencies.

Anna Bligh, CEO of the ABA, said that banks will report customers as not having missed a repayment, provided they were up to date when granted the relief.The same policy will be applied to any lender-approved repayment pauses for personal loans and credit cards.

Get your own customised budget

If you’re wanting to map a plan for your money and obtain full visibility of your finances, make contact with MyBudget today and book your free phone appointment on 1300 300 922 or enquire online. The customised budget we design is yours to keep.

Learn about debt consolidation, download a budget template, discover how MyBudget works, sign up for money tips on the MyBudget Blog or follow MyBudget on Facebook.


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