The Job Seeker has been a lifeline for many Australians dealing with the financial impact of the global pandemic. The JobSeeker has been a great initiative from the Australian government to support families in need.
Unfortunately the JobSeeker will cease at the end of March 2021. The question remains, will no JobSeeker change the property market? Will it cause prices to drop and will rents change?
According to Eliza Owen from CoreLogic (research experts), the impact to be modest at most.
Property prices
At Crest Property Investments we are inclined to agree. The government has strategically phased out the initiative by reducing the payments so that many Australians who have required JobSeeker have had time to slowly adapt to the covid-19 norm in 2021 and beyond. Witnessing these slow changes in payments has demonstrated no material change to the property market. Looking over the month of February 2021, auction clearance rates and private sales have been increasing and remaining steadily high.
Eliza Owen also made mention “Housing market momentum has increased from September 2020 to January 2021, amid the reduction in the supplement. Between the end of September 2020 and January 2021, the CoreLogic national home value index rose by 3.2% with rental values also increasing by 2.5%.”
Referring to recent data from the Department of Social Services (DSS), there were 11.7% fewer JobSeeker recipients in January 2021 compared to September 2020.
With interest rates still remaining at historical lows, this has certainly assisted many family on lower incomes to find a means of keeping their home. If low income earners remain cash flow positive in the foreseeable future, its less likely you’ll witness distressed property sales.
“This would imply an indirect impact on housing prices, where reduced rental return could impact an investor’s willingness to pay for a property.”
Rental prices
We anticipate rental returns to improve in the coming months. This trend has already begun in early 2021. With reference to rental yields between September 2020 to January 2021 all but one region experienced an increase in rental values.
Once JobSeeker ceases at the end of March 2021, there may be certain locations that experience some downturns or rental issues, but for the most part, many Australians have started to find some form of employment which has seen an increase in rental return.
What is next?
If you are an investor, holding open correspondence with your tenants goes a long way to protecting your asset and income. If you both remain open and honest about your joint situation, it will prevent any cash flow issues. The cliché ‘location.. location.. location’ will always ring true. If you have bought in a highly sought after area, you’ll soon see better rental returns. It’s important to remain in close contact with your property manager as they regularly monitor rental yields and vacancies. Prior to approaching your rental renewal, landlords and property managers need to assess their opportunities. Increasing your rental return is one thing, but sometime keeping your existing tenant may be more rewarding as costs remain lower and you reduce the chance of a vacancy
If you are wanting to buy an investment property, we are here to help! At Crest Property Investments, we source brand new and off the plan properties for buyers. They offer great rental returns as many tenants love to occupy a new home. Please feel free to contact us to learn more.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
March 2021
