Most likely everyone will have seen the headlines of late in the media about the property prices in Australia set to fall between 20 to 40 percent, not to mention all the rhetoric about the “wait until September” headlines when both Jobkeeper and Jobseeker are set to wind up. From this, there are many opinions being thrown around currently. Both benefits may be extended past the September timeframe and that seems to be overlooked in the more sensationalised media coverage.
Most certainly many businesses will be affected negatively by the global Covid-19 pandemic and its aftermath. In my opinion, and without bias, it is certain that properties prices will fall in value. I do personally believe that these scare tactic predictions of some economists of a drastic drop in property prices is nothing more than sensationalism geared towards the most drastic outcome.
The RBA is unlikely to increase interest rates for at least the next three years, and this temporary recession is actually helping the inflation issues that were plaguing Australia.
Borrowing costs currently are the lowest they’ve ever been. This should significantly decrease the “peril” that some of the doomsday economists are predicting. The Recession in the early 90’s saw interest rates up to 20 per cent and the banks at that particular time had no buffer or room to move and therefore they needed to move mortgages off their books.
It is my personal belief that the record low interest rates will safeguard lenders from the need to call in large quantities of their loans if times should fall into the more precarious category.
With more listings coming to the market it provides the buyer with more choice and part of these choices will be better quality properties.
It will be the lower-quality real estate that will be the most exposed in any downturn. Location, uniqueness and well-built properties and overall appeal will safeguard the better-quality real estate from having a huge fall in price caused by external factors like an economic downturn exacerbated by Covid-19.
In Brisbane there are already price corrections in lower-quality apartment complexes. Buyers with a wide range of choice should consider the better-quality options and in developments from well-respected developers. These will always prevail positively and strongly as they were built for the long-haul owner and investor. They are highly planned and therefore desired by both buyers and renters alike.
Buyers and sellers need to look at properties and assess what they can do for them in the future. If they are looking at buying a property as an investment, what can it offer their tenants as well. Buy a “bargain” now and you will get less lucrative outcomes in the future.
Brisbane and Perth are aligned to boom in the future due to mining, infrastructure, future growth and job prospects, and above all - liveability.
Stay safe, well and happy