What will happen to the property market if we have a 2nd wave of coronavirus?
Despite the predictions of doom and gloom, the property market has remained remarkably resilient in the face of the initial shocks to the economy that Coronavirus has caused.
Yes, property prices have fallen, but nowhere near to the extent that some thought they would.
Interest rates remain low and while there is some mortgage stress in the market, this has been offset to some extent by loan repayment holidays allowed by financial institutions. One of the interesting factors that has occurred is that rather than panic, prospective home sellers have largely withdrawn from the market and essentially waited for better market conditions.
Now, with large parts of Victoria in stage three restrictions and New South Wales experiencing “hot spots,” there is much concern about a second wave and how that might affect the economy and the housing market.
While no one can tell for sure what the “second wave” would look like there are a couple of key elements that are worth taking note of. These are
- While the coronavirus situation is serious in Australia, Australia remains one of the best placed economies to deal with the situation. This is a sentiment shared widely across government, financial and housing sectors. That doesn’t mean that things will be easy, it does mean that from a long term perspective, Australia should be able to get through this.
- Some property sectors are more vulnerable than others. High rise apartments are likely to be difficult to sell. Off the plan apartment properties may be vulnerable as will outer suburban house and land packages.
- Property has and will be for the foreseeable future a quality and secure investment for those with the resources and leverage to invest for the medium to long term.
- In all likelihood, people will be somewhat cautious when it comes to property investment and this may lead to house prices being suppressed in the short term.
While there is certainly some doubt and uncertainty about both the economy and our housing market in the short term and banks will scrutinise loan applications with these doubts at the forefront of their minds, there will certainly be opportunities that present themselves for the smart investor.
If you would like to discuss your housing finance options in today’s market please give the team at Australian Finance Hub a call.