The real estate market is expected to run at full steam despite the end of economic support measures from this week, defying long-standing concerns of an impending fiscal cliff, according to top economists.
Brick-and-mortar resistance barely collapsed during the pandemic-induced recession, with house prices briefly falling and then soaring in major cities and regional towns – contrary to expectations.
At the height of the crisis last year, house price cuts of 10 to 20 percent were expected amid fears of a fiscal cliff in September when income support measures were due to end.
But that never happened. Instead of dying out overnight, income support measures have been extended for another six months with progress payments starting in October.
JobKeeper will end on March 28, while in a few days JobSeeker’s payments are expected to be reduced, bank holidays will end and moratoriums on rental evictions will end.
While economists recognize the pain ahead for those who lose their jobs, they believe it will have little to no implications for a housing market that continues to accelerate.
EY Oceania chief economist Jo Masters said the housing market absorbed these changes well last year when house prices accelerated and the economy continued to improve.
“In fact, I don’t think it will have a dramatic impact on house prices and the housing market. We have already had two resignations in support, ”said Ms. Masters. “The October resignation was bigger than the one we’re going to see at the end of this month.”
The unemployment rate fell to a low of 5.8% in 11 months, from 6.3% in February, according to figures from the Australian Bureau of Statistics, with already growing demand to allow skilled migrants to enter the country after the result better than expected.
The distressed sell-off by investors was also unlikely, Ms Masters said, as they had survived the worst last year.
“We tightened lending standards in 2014 and 2015,” Ms. Masters said. “This is one of the reasons we haven’t seen struggling sales. We have improved lending standards and mortgage books.
The expiration of the wage subsidy is expected to put around 110,000 jobs at risk, but that is nothing compared to the overall strength of the economy, according to Gareth Aird, head of the Australian economy at the Commonwealth Bank.
“What does this mean for the housing market? We don’t think there will be any impact from the expiration of JobKeeper, ”Mr. Aird said.
“Concerns about the expiration [of wage support] in September were much more valid because the economy was very different.
“In September, there were a lot more people on JobKeeper and a lot less people employed. GDP and production are back to pre-COVID levels. “
Even ANZ chief executive Shayne Elliot recently said the so-called ‘cliff’ that many feared in September last year was now a “Very, very shallow cliff, if at all”.
The only measures that would slow down the remarkable recovery in the housing market were the rise in interest rates and the crackdown on bank lending by regulators, as they did in 2015 and 2017.
But neither will happen anytime soon, according to Aird, who said policymakers would welcome the increase in activity rather than stifle it as the market is driven by homeowners and first-time home buyers.
Some pockets around Australia face headwinds, said Alan Oster, NAB chief economist, including city centers and popular travel destinations and the industries around them, such as food and l ‘accommodation.
While Melbourne’s CBD and Queensland tourist spots could be among the hardest hit areas, that would only slow the recovery, Mr Oster said.
“It will not change the outlook for the real estate market,” he said.
“We don’t think house prices will continue at the current rate, but neither do we think they will collapse. It might make things a little more moderate.
“What we’ve seen so far, in terms of the number of credits, [is] no increase in investor credit. All the owner-occupiers and at the bottom of the market move in.