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Why Shouldn't You Worry About a Recession?

There’s a lot of talk lately that we are going to have a recession and many people feel that this will make the housing market crash, so they are sitting back waiting to see if they might grab a property bargain. Certainly we have a lot of interesting factors at play, especially in Qld so should you worry about a recession?

We need to be a bit more practical, everyone seems to get very excited these days. I found a very well thought out article on Finder.com.au by Richard Whitten; practical, thoughtful and analytical it puts things into perspective.

If you were asked, did the housing market suffer during the recession in 1990’s what would you say?  It’s rather interesting to note that the property market continued to rise! And this was during the worst period of time since the Great Depression. Don’t take my word for it, you can look it up on the Australian Bureau of Statistics website.  And in 2008 when we avoided a recession altogether, what happened to the property market? We had a small dip in 2009 before it came right back in 2010. 

Of course this doesn’t mean there won’t be any affects felt, but most likely it won’t be anywhere near the gloomy predictions you’ve probably been reading about.  

No doubt the Banking Royal Commission and APRA put a lot of pressure on lenders to stop the over-borrowing and this has made mortgages more stable as many homeowners have managed to get ahead on their repayments and have the capacity to absorb the interest rate rises.  There’s plenty of stories out there saying the market is crashing, but it seems more practical to say it is correcting itself after such huge increases. Certainly in Hervey Bay, we are not seeing any crash, prices are still holding steady, supply is still low and demand is still high.

If you are waiting for a crash to grab yourself a bargain, you may miss out altogether; unless the unemployment levels rise, then we will see property owners in distress and selling cheap. Personally I hope to never see this, with our massive housing shortage already taking a toll on many families, the results would be devastating for so many.