Savvy readers will note that the headline reads influence and not impact. The media’s fixation on the Coronavirus (or COVID-19) has rocked many parts of our economy, small and big industries and businesses, and governments, with greatest influence on global consumer and financial environments.
The current economic climate will affect everyone, some more than others, but there will be change nevertheless. From term deposits to shares to superannuation.
What about property? Is buying or selling your home whilst COVID-19 is still in the mainstream the right time to take action?
It’s said that past behaviours are both a good and reliable indicator of future behaviours (performance). And critically valuable and relevant to COVID-19, as it was to other economic influences in our history, is how Australia fares through and out the other side of such disruption.
As a 20-year ex-bank manager, I can tell you I’ve experienced first-hand the many highs and lows of our economy, albeit stronger than almost all of the world, and its influence. What I’ve learned through the market crash of 1987, the recession of 1991 and the global financial crisis and interest rate rise in 2007, is that when the market recovers (and it will), that financial commodities such as property and shares will rise, more often their trajectory surpassing their pre-crisis values. None is more evident than property in Australia.
This week on the official announcement of the pandemic, the Australian Reserve Bank reduced the cash rate on which all lending is factored, to a historic low. And banks followed their lead to lower home loan rates, but there’s an anomaly that speaks to future prosperity and growth. Fixed term interest rates went up. Right now, financial institutions are seeking to sure-up deposits for borrowers for when the market recovers post COVID-19. That’s a bloody good sign!
If you’re in the market to buy property and have your finances in-place, but electing to hold off for when COVID-19 passes, you may get caught in the kind of frenzy brought on by too-fast growing consumer confidence and demand, and too few properties ready for sale. As history shows, this can drive up prices significantly.
If you’re in the market to sell property it may be reassuring to know that the local market is scrambling for stock. Just look at the recent spike in real estate agency ads on TV, radio and social media. Stock, as it happens, is the holy grail of real estate – not sales.
Like much of 2019, 2020 is shaping to remain a buyer’s market, and buyers want (read: demand) good property purchasing options across all parts of the local market from studios to executive homes. And with so many cashed-up and finance-approved buyers already in the market, and such low rents on their traditional savings and superannuation, it’s crazy to assume that a flu-like virus is going to stop serious homebuyers and investors. Though expect to see more private sales than auctions in the foreseeable months.
What if your property is for sale amidst the COVID-19 crisis? Don’t be tempted to withdraw your property from sale. Ride the wave and prosper at the other end, as the market recovers. If COVID-19 lasts longer than expected, your agent can always re-invigorate your campaign and reach previously interested buyers too afraid to put pen to a contract.
Buying or selling property in Australia is always a good move.