The last 18 months has seen significant changes in business, economies, education, property, social, health etc. etc. etc. Almost everything has been impacted Covid.
Interestingly most markets and economies moved in the opposite direction to what was predicted. Remember the forecasts that unemployment would hit over 8% and house prices could drop by up to 30%? Such is the difficulty in forecasting that experienced economist often say they spend more time working out why something happened rather that what is going to happen.
Whilst all markets run on sentiment, there are some underlying factors that have consistently impacted the property market positively or negatively over the years.
- The current and forecast cost of credit (interest rates) on a loan.
- The availability of credit or how willing financial institutions are to lend.
- Job security which determines a borrowers comfort in committing to large or long term debt.
- The health of the household balance sheet which impacts the size of a deposit.
- Supply and demand of specific housing product.
Interestingly due to Covid people’s spending has been curtailed meaning their available deposit has grown and their loan applications are clearing the approval hurdles more easily. Simultaneously interest rates remain low, banks are happy to lend and the job market is pretty tight which have all pushed prices higher.
However due to Covid the utility of the home has had to increase to include the office, the classroom, the restaurant, the bar, the playground, the gym, the childcare centre and the movie theatre. This is why houses have seen a price rise ahead of apartments as people have needed the additional amenity which may change post covid.