Answers in times of doubt; COVID-19 and the Property Market

We’ve received a number of questions from concerned clients asking about the impact Coronavirus has had on the property market and what the future may hold for property investors, so I thought it would be beneficial to share some positive insights. Yes, there is madness and chaos all around. There are a lot of unknowns...

Yes, there is madness and chaos all around. There are a lot of unknowns and many people are full of fear. We don’t deny this is a serious situation, but if there’s one thing we all agree on is that at some point this will end. The market will recover and most of us will be ok.

I am confident in Australia’s ability to recover quickly from this difficult time with such resilient communities and decisions made at the highest level to put us all in the most robust economic position to bounce back.

While we all adjust to these unprecedented times, we have remained in constant contact with our development and builder networks. Most are continuing to work to deliver product and handover in set timeframes, while following the social distancing requirements.

I love property for a number of reasons, but particularly in times like this when so many things are uncertain, the property market is a constant. There are fewer extreme reactions because of people panicking. Property is not as volatile as the share market and has historically stood strong in times like this.

Furthermore, residential property in particular is a strong investment option in the right areas at any time, as people will always need somewhere to live. Plus, with all the social distancing recommendations being enacted at present, ‘home’ is the safe, secure place for most Australians right now and will be even more so the longer the virus is present in our lives and media.

There may be a fear of purchasing or making any kind of decision beyond the immediate future. I understand it is challenging to make big decisions when everything feels uncertain and ‘real life’ has been flipped upside down. However, if history is anything to go by, it is precisely these times that the smart investor makes great headway by enacting their strategic plans.

Some facts that may put your mind at ease:

The property market has remained strong through tough times before – through global crises such as the GFC, and outbreaks of illness such as SARS, the Australian property market remained resilient.
Demand for property in Australia has actually increased in the past when international stock markets were falling and our dollar weakens in response to global financial instability, which in effect increases the attractiveness of Australian property from an international perspective. During the SARS outbreak, Brisbane’s property market experienced a boom due to its reliability, lifestyle and affordability, particularly relative to Sydney and Melbourne.
The RBA has cut interest rates once again to help ease the short-term financial impacts of COVID19 and to stimulate the economy. This is making housing more affordable and more attractive to investors. The banks are also demonstrating a positive attitude to supporting their clients across a number of measures.
The Federal Government has announced economic stimulus packages for businesses supporting employment continuity, with more announcements to come. This is positive for all types of property, helping to ensure rents and repayments can be made.
On the Sunshine Coast where we are predominantly focused due to the incredible opportunity, there are still a number of large-scale infrastructure projects in progress that will continue unimpacted by the Coronavirus. Things such as the airport upgrade, Maroochydore CBD, upgraded transport options and more all add to the liveability and the demand for housing options in this booming region. Add to this, the largest per capita undersupply of property in the country in the largest 20 cities, and we could sustain a dramatic reduction in demand for a couple years, and remain in undersupply.
The state government has indicated that it will bring forward significant funding for additional infrastructure projects across SEQ to deliver more jobs which puts more money back into the economy and creates a positive ripple effect while delivering more to the liveability of the region.
Morgan’s Chief Economist and Director of Strategy, Michael Knox, stated in a note to clients, that should this pandemic come to an end as expected in the second half of 2020, then “this situation of limited supply and rapidly expanded demand could generate a dramatic acceleration of housing demand in Australia. This will support a powerful recovery of demand within the domestic Australian economy”.
Dr Andrew Wilson, Chief Economist for My Housing Market, believes the housing market will bounce back with an underlying robust and resilient nature. He says, “despite the usual energy of multiple rate cuts being no longer available given current official interest rates at near zero, governments will be fully committed to initiating significant economic stimulus. This is likely to include policies directed at the housing market – such as mortgage repayment relief, stamp duty reductions, rent subsidies, first home buyer stimulus packages and actions to free up finance for investors and developers. These potential policy initiatives will again validate and reflect on the success of past governments that have used the robust and resilient nature of the Australian housing market as a vital force to regenerate growth in times of economic stress.”

While we won’t make light of the seriousness of the Coronavirus, we will extend our belief that everything will be ok. We can help you build and protect your cashflow through property investment now, even while panic surrounds us, for a more secure future for you and your family.

We can show you the way.

The safety of our people is paramount, so we have ways we can work with clients to deliver one-on-one insights without the need for face-to-face contact. With clients across the country and globe, we are not new to phone and video meetings and can guide you electronically on a strategic property investment plan that suits your current circumstances and future goals.

If you’re interested in more reading on the Australian property market from another trusted source, take a look at this link:

https://www.corelogic.com.au/news/coronavirus-and-australian-property-market

To find out how to build secure cash flow, capital growth and how to maximise the present opportunity, connect with us via your preferred communication method.