Given the economic downturn associated with the COVID-19 pandemic, many are expecting an increase in distressed sales in the current climate however, data from Domain Group suggests there is little evidence to suggest this to be the case.
Domain data for the February – May period indicated a marginal increase in the proportion of urgent sale listings in Sydney, Perth, Adelaide, and Hobart during the period when the full economic shutdown and social distancing restrictions were in place [1].
Over the same period, Melbourne and Darwin had no change, while Brisbane and Canberra saw a marginal decline in the portion of urgent listings.
Key Takeaways
This data suggests homeowners are not being forced to sell despite the economic turmoil and rising unemployment created by the COVID-19 health crisis.
At the same time, low sales volumes over the period would suggest that homeowners are battening down the hatches and waiting for the storm that is COVID-19, to pass.
With the help of Government stimulus packages as well as many lenders offering “mortgage holidays”, some of the pressures associated with the economic downturn have been reduced, therefore easing the drivers that are the precursor for distressed selling.
Given the economic impact has been concentrated on particular industries, economies heavily reliant on tourism, hospitality, arts, and recreation will have a greater risk of rising distressed sales.
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Bradley Wearne - General Manager & Head of Research at Meridian Australia
P: (02) 9939 3249
References
[1] Domain Group - Panic Selling