Should you invest in property this 2020 while there is a pandemic?
As people the world over panic and the economy grinds to a terrible halt with Australian property experts painting a grim future for the property market, you most probably have set aside your plans to invest in property. So what is the right time to invest in property?
If you’re watching the property market closely though, you also probably heard of other experts saying the exact opposite thing. So, should you or should you not suspend your plans to invest in property indefinitely?
The Australian Property Market in 2020
Don’t let conflicting reports you hear about the property market muddy the water. Pandemic or not, what you hear in the media is the average condition of all the properties in the country.
Keep in mind that there are about 8,800 suburbs in Australia. This is why there is no “one property market,” so sweeping statements you hear are typically just that.
If you want to accurately measure the impacts of a crisis on the property market, checking how it performed in the past is worth the exercise.
Check the historical responses of property to economic crises and check the particular area you want to invest property in. As it is, stock market crashes and economic recessions aren’t always precursors to a decline in housing values. See the graph below.
Positive Government Incentives
Further to the unlikelihood of a downturn, and in response to the current global crisis, the government and banks have staved off massive price reductions. Incentives, such as the JobKeeper package, have acted in a strong and powerful way to ensure we don’t experience a significant drop in prices. In terms of leasing performance, these incentives have also gone a long way towards alleviating investor concerns.
With comprehensive research and knowledge, wise investors understand that 2020 could be the right time to invest in property.
Supply and Demand
What does alter property prices is supply and demand. Currently, there’s a lack of supply due to owners pulling properties off the market, with mixed results. For example, recent auctions in Sydney and Melbourne have produced prices significantly above reserve. Yet, in other suburbs, oversupply and high vacancy rates in units have led to a drop in prices.
One of the biggest things on the horizon is overseas immigration, which may reduce by about 85%, with regard to demand coming in. This will result in an oversupply of certain residential apartments in the immediate future. However, the pipeline is already slowing down towards market equilibrium.
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