Analyst warns of forced property sales amid COVID-19 duress
HOUSING prices in the Brisbane region could fall by as much as 30 per cent with forced property sales reaching in the thousands in certain suburbs.
Analytics firm Digital Finance Analytics (DFA) forespelled North Lakes may be one of the hardest hit suburbs with 1275 forced sales expected over the next few months - of which 1112 would be investment properties and 163 owner-occupied.
DFA principal Martin North said North Lakes property owners were in for a scare.
"A lot of property investors are finding that, one, they can't get tenants, secondly, where they can get them they are not getting sufficient rental from them to cover the expenses," he said.
"And quite a few in North Lakes were short-term rather than long-term rentals such as Airbnb which have now gone due to COVID-19.
"And quite a few of the area's investors are older, we call them the wealthy seniors, and a lot of them can see that the capital values of those properties are likely to decline, so they are trying to get out quickly before there is an even sharper decline."
However Ray White North Lakes sales agent and principal Darren Suhle said he could report nothing of the sort.
"We've got a lot of people still buying homes, the whole vibe of it is still going quite well.
"We have had to put a lot of precautions in place with one-on-one inspections and so forth but other than that it is going very well."
DFA said areas populated with more owner-occupier houses were predicted to fare better.
The 4500 postcode for Strathpine, Brendale, Cashmere and Clear Mountain was expected to see 695 forced sales of investor properties.
Redcliffe and Scarborough - 4020 - may lose 129 investment properties.
While Kurwongbah, Kallangur, Murrumba Downs, Dakabin, Griffin and Whiteside were expected to see very few forced sales.
Mr North said the region's hardest hit postcode, 4300, which includes Goodna, Augustine Heights and Springfield Lakes could see a loss of 2416 properties - 2228 were predicted to be investment properties.
The analyst warned the overall impact could be dramatic with no swift recovery in sight.
"There could be a 20-30 per cent fall in prices," Mr North said.
"Prices will continue to fall, how far will be dependent on how long the economic freeze continues.
"My modelling suggests it persists for six months or more.
"Even if you get the recovery there is no guarantee people's income and property buying trends will be the same as they have been.
"I expect the number of properties for sale to increase, sale prices will drop and the momentum will ebb away for at least 12 to 18 months."
A silver lining did emerge in modelling for owner-occupiers.
"Owner-occupier borrowers are able to get the six month interest and principal postponement of mortgage repayments," Mr North said.
"It is more tricky for property investors; about half of them are unable to get their mortgage repayments postponed currently but this could change of course."
All four of the big banks offer mortgage assistance specific to the COVID-19 fallout with residents urged to speak to their institutions for guidance.
Originally published as Property investors in for 'scare'