2020 continues to be one hell of a roller-coaster ride so far. Economies coming to a complete halt, countries shutting down their borders, people panic buying groceries and toilet paper, stock-markets crashing and unemployment levels skyrocketing across the globe. Lots of uncertainty and panic. Are we headed for a recession? What will the long-term effects to the economy be the Covid-19 response worldwide?
How will all this uncertainty affect the value of property?
The value of property for the short to medium term will be determined by how badly the Covid-19 situation affects people’s income and jobs, how much money the banks allow them to borrow, and how much credit is available to be drawn.
As we have already seen, industries that employ people in Tourism (ie. Travel), Hospitality (bars, cafes, restaurants), Education (less students coming from overseas), Retail (less people shopping in stores, and more people going online), Recreation etc, will be more affected than others.
Industries like Groceries, Health and Medical on the other hand, could not have it better during these times, so will not be affected as much.
Regardless of the doom and gloom and panic merchants, there are certain fundamentals that have always supported our property markets and will continue to do so, even during these difficult times.
Low Interest Rates
Interest rates have been at an all time low even before Covid-19 and will continue this trend making it easier to own a home, as either someone who invests in property or who owns it.
An Increase in Population as Australia is seen as the lucky country who managed Covid-19 well
Whilst the borders are closed, this statistic will slow down, however, as can be seen in the many articles in the news, and media, Australia has managed the Covid-19 situation better than others, and when things start to turn for the positive you can be sure that more and more migrants, will call Australia the lucky place once more.
Less and Less Housing Supply available
There will be a massive undersupply of properties in the right places, in capital cities like Sydney and Melbourne. Location, Location, Location will take on a new meaning in these times.
More people turning to renting as less and less housing supply available
Lifestyle and ability to afford housing, will see an increase in these people looking for accommodation. Property Investors will be the winners here and be able to fill this need.
Strong Financial System
The Banks are strong, and very stable. Cheap finance is available as long as you have done your due diligence and can show a solid plan.
First Home Buyers are rushing to beat the continuing rise in property prices
With the government encouraging new home owners, cheap finance available, low interest rates, and steadily increasing property values, there is a huge movement for first home buyers to get on board as quickly as they can, as the rise in property prices due to low stock, shows no signs of stopping.
Changing demographics are bringing smaller houses to the forefront
Our generation is starting to pass the baton onto Millennials who will start to make up one third of the property market, smaller households will become the norm. Doing the maths this means that more property will be required for the same number of people.
Strong Foundations
Superannuation and the economy is taking a hit, which is impacting the share market volatility, but one thing is for sure. Nothing is as safe as houses in Australia. With 60%+ of property owners being owners of homes who are there for the long term, there is nothing to worry about. Australians will always rank their number one asset to be property over everything else. They are never going to give up their most valuable asset. Bricks and Mortar has always stood the test of time and will continue to do so, over shares, and all other types of assets.
All this volatility in the economy will make some stock investors, look to real estate as the most secure form of investment.
Conclusion /Next move
For now it looks like there are winners & losers, but how will it all play out? It depends on your next moves. There will be opportunities for you to buy/develop as there are going to be properties available that were previously tightly held, some will be on the market, but many will be off-market.
Consider registering so we let you know when the property/site you are looking for becomes available. It may be available right now!
You can be in the right place at the right time.
