The number of distressed sales and mortgagee sales in the property market remains low, and there are likely several factors at play here.
Firstly, the Jobkeeper and Jobseeker payments are providing some income to those whose employment has been affected. This is helping those individuals who have lost their jobs or had their hours cut, to keep making mortgage payments.
Secondly, many banks are allowing borrowers to set up deferral plans rather than chasing borrowers who default on their payment. And the reason this is possible, is because the banks are very well capitalised at the moment. This in turn is the result of the Reserve Bank’s quantitative easing strategy. The bank’s aren’t feeling the need to foreclose on people’s homes, because they’re sitting on billions of dollars of cheap bonds. At the moment, it’s better to work with someone in distress than try to hold a mortgagee sale.
Since the number of distressed sales is low, property prices are holding relatively stable. Yes, there have been some drops. We are in a recession, after all, let’s set our expectations appropriately and not expect a miracle.
But as long as these stimulus measures hold in place, the market should hold stable.