Coronavirus has up-ended almost every part of our lives so it seemed inevitable it would come for our homes.
There’s speculation home prices could fall up to 20 per cent due to fallout from the pandemic and understandably people are worried. But I’d caution against reading too much into early predictions.
Economists who specialise in housing market analysis can take months to develop price forecasts but new virus predictions are being thrown about by so-called experts within hours of government announcements.
I’d question exactly what “experts” who have put a number on coming price drops are basing their predictions on since there’s little historical precedent for the kind of changes we’re experiencing.
And let’s keep in mind that our biggest property research companies and lenders, who often invest the most resources into developing predictions, have yet to issue comprehensive new forecasts.
I think it is fair to expect prices to take a hit but anyone putting a precise number on those decreases is making pure guesswork at this stage.
We also have to remember there is a huge level of variance in housing markets across the country. What may be true for one market may not be for another. And every property is different.
The best quality properties in popular locations will hold their value better than, say, cookie cutter-style units in less accessible suburbs.
Let’s also consider the types of properties likely to be listed during the coronavirus crisis. It’s reasonable to expect a large portion of sellers will sit on the fence and wait for the crisis to blow over.
Many of the sales that will proceed will come from those forced to sell or those with some approaching deadline that necessitates selling quickly.
Being in that situation is never ideal for a vendor in any market so the experience of these sellers may not give an accurate indication of how sales are progressing in the market as a whole.
There are countless other variables to consider and it can get complicated accounting for all of them. That’s why modelling future price movements often takes so much time.
Don’t get me wrong. We could all use a bit of certainty in these trying times. I’d also like a better sense of how everything is going to work out and what direction we’re headed.
But let’s not jump to major conclusions just yet.