Australia’s property market has outridden major economic downturns before and will again, despite the current fear around the effects of the Coronavirus outbreak.
Property experts believe now is the time to be looking for opportunities as the market heads into a “short, sharp downturn” before quickly rebounding.
Terry Ryder of Hotspotting – speaking at today’s “Coronavirus – threat or opportunity” webinar watched by thousands of real estate consumers – said fear about future economic certainty was understandable but he said investors and owners needed to remember property was a long-term game.
“It is a time to be looking for opportunities, when others are perhaps intimated and sitting on the fence,” he said.
He said government financial stimulus and flexibility from banks during the Coronavirus shutdown would help cushion the property market from any significant blows.
Buyer’s agent Rich Harvey of propertybuyer likened the current crisis to a storm which would eventually blow over.
“Generally, the property market has performed well during these economic shocks and it is quite resilient,” he said.
“If we think back to the Global Financial Crisis the share market plunged 55% in 2008 but the property market only dropped 7% during the same time period – and then rose 13% in 2009 and a further 6% in 2010.”
Ryder said immediate impacts on the market would be more around the way in which properties were listed for sale and sold.
There would be fewer auctions as agents complied with social distancing rules and open homes would be held via virtual tours rather than in person.
Harvey said figures released by SQM Research revealed weekly asking prices had dropped in the past week, showing a “dramatic drop in sentiment”, but he didn’t expect that to be a long-term issue.
“The property market is in some ways sentiment driven but it is also fundamentally driven by population growth, by the state of the economy, including employment levels and infrastructure growth,” he said.
“I believe it (Coronavirus) is going to change the way in which we interact with each other, but I don’t believe it is going to fundamentally change the property market.”
Harvey said Australia had a “demand heavy” property market and a lack of supply which would help it quickly recover once the peak of the virus had been through Australia.
“What I believe is that there is strong demand sitting under the surface there, and tight restrictions on development and on planning are going to continue to create supply shortage,” he said.
“We won’t see a fundamental change to the property market, we are just going to see a very severe short-term downturn and then a very sharp rebound.”
Ryder said markets were likely to experience a reduction in activity but not a significant reduction in prices.
“One of things that is happening is vendors are already not listing their properties for sale at the same levels they were a year ago and two years ago – and I think that is going to be exacerbated by the virus crisis,” he said.
“We are still going to have demand, but have relatively few properties for sale and that will help to put a floor under property values.”
Ryder predicted that many of the nation’s regional property markets would be insulated from any property market downturn, particularly as those markets were not heavily reliant on the tourism or hospitality industries.
Mr Harvey said for those who had secure employment and their finance already approved, now was a good time to consider buying.
He warned sellers not to panic, but to ensure they had a good agent who could market their property properly in the current environment.
Vendors also had to be prepared to meet the market, as it was not a time when they were going to achieve record prices.
Ryder said now was the time for investors to be using experts who could properly advise them on the state of individual market of interest.
“There will be opportunities and I think there is going to be plenty of good opportunities in our regional markets which too many property investors overlook in normal times,” he said.
Harvey said investors needed to be prepared to buy before the market bounded back and for those who were struggling, they should talk to their bank about getting a better rate to refinance or taking a mortgage payment holiday.
“Don’t panic – it is not the time to sell the family home,” he said. “Stay the course and talk to your bank about holding on.
“We will get through the crisis.”