Coronavirus: Australian Property Market Faces Potential Collapse.

I’ve been analysing Australian real estate data for 6 years. I’ve never called a crash but I did sell my own house in 2016 and switched to renting. I’ve doubted pundits’ ability to call the timing – there are just too many factors.

But this time, the pressures are enormous.

Australia’s Deputy Chief Medical Officer has pretty much spelled out that 50,000 – 150,000 will die of this virus. Of course we can only estimate at this stage but let’s he’s in the ballpark and go for the middle of the range: 100,000 coronavirus deaths in Australia.

Over 80% of the Coronavirus dead will be over 70

Most of the dead elderly

As you can see, this is of course not going to spread evenly across the population: it will impact the old much more than the young. Half of the deaths will likely be of people over 80.

… and most of these own homes

Most of Coronavirus dead are home owners

What’s worse: the elderly own property in much greater numbers. 85% of them own homes. This adds up to about 80,000 home owners dying this year. In addition, 31,000 of this 80+ demographic live alone.

Now not all beneficiaries will want to sell during depressed conditions but those same conditions will give some an urgent need for cash.

On top of that, the borders are closing tighter every week, so the classic justification for never-ending property market growth – immigration – will be much lower this year. Migrants typically don’t buy when they arrive so the effect may be again delayed.

This is before considering the abrupt halt to the economy and associated loss of income, with home owners forced to sell as they can’t make mortgage payments or have tenants who can’t pay the rent. This will probably hurt even more.

Of course, this is all assuming no government intervention and you can be sure that the federal government will be trying to freeze up market distress to match its freezing up of economic activity. 

More to come.

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