A new global crisis to infect property
Well our fabulous though dangerous year is continuing on as it started. On top of the natural disasters, we experienced the sharpest share market dip in history last week.
Economists sited the spread of the coronavirus as one of the causes of the dip, although some also noted investors were becoming skittish as the share market had reached historical peaks in February 2020.
We’re over it though
In Australia, this week we’ve already moved on from that news – we bounce back quickly here particularly as the GFC taught us all that what goes down will usually go back up, though it’s anyone’s guess as to when a share market recovery will take hold.
The biggest issue we’re dealing with this week is the strange and unprecedented run on grocery market staples. You would think there’s a pandemic coming or something.
Interestingly, just like the property market, the grocery frenzy is very suburb specific. In some areas, toilet paper will just not stay on the shelves while in other areas the buying patterns have not changed at all.
Property market impacts?
This leads to the question of the impact the share market and a potentially B.A.D. flu season will have on the property market.
Referencing the GFC again, it’s reasonable to expect downward price pressure at the higher end of the property market – that is, properties $2,500,000 and above. Of course, this will also mean some opportunities for bargains depending on the duration of the share market downturn.
For the other end of the property market – $1,000,000 or less – expect to see 7% plus rises in the main centres as forecast at the start of the year. Why? A few reasons . .
- the potentially regrettable RBA decision to drop rates this month by 0.25% resulting in more sugar for the property market – hopefully this will eventually flow through to retail and services
- the government will want to see funds continuing to flow into the economy and will ensure lending remains accessible to the broader population
- investors will increasingly turn away from the share market and direct their funds towards the property market
- the population predictions have not changed, so housing demand continues to outpace supply year on year
- both Federal and State governments have committed to extensive infrastructure works
- the recovery activity (if they ever get funds out into the impacted communities) in bushfire and flood affected areas will provide stimulus in pockets of the economy – we’re already experiencing difficulties accessing trades . . .again.
Be warned though, some areas and suburbs will be negatively impacted by recent events. For example, suburbs dependent upon mining and major tourism areas will struggle. Once again, good performance for both capital growth and yield / rental returns will be dependent upon selecting areas with healthy growth drivers.
In times of uncertainty we also see the gold in selecting positive or at least neutrally geared properties. This approach is the ultimate insurance because if your worst case scenario unfolds and you lose your job, a positively geared property will continue to look after itself until you can get back on your feet.
The revised forecast
I recently had the opportunity to speak with real estate industry rock star, Tom Panos, to obtain his views on the market forecast as we head into the busier buying months.
Tom’s views are summarised in the latest issue of the Property Portfolio Magazine along with tips for how to make the most of the current market, advice on compiling your finance team, accessing funds and buying overseas. Read the latest edition here.
Other ‘key’ news
At Crave, we’re constantly striving to ensure all buyers can access service and advice that will enhance your financial future. Property is the most expensive purchase most of us will ever make and yet the majority of people make property decisions on a whim with very limited information.
We’ve been working on providing services that everyone can access . .you’ve heard about these services over the past few months and there’s much more on the way, so we’re re-branding into a whole new entity . . .The Property Frontline.
This will be my last post to you under the Crave banner. Don’t fret though as our original service is still on offer but now known as the ‘Property Fast Track’. The full summary of services can be accessed via this link.
Let me know if you would like to get a more detailed understanding of our new range of services. In the meantime, watch this space as we work to make buyers stronger, more successful and resilient to those pesky spruikers and bad agents.
Founder & Director, Crave Property Advisory AND The Property Frontline
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The Property Frontline is a unique property strategy and buyers agent service. As the only independent and unbiased advisory that can help you use any property strategy Australia-wide, our services extend to home, investment and commercial property. A highly client focused organization, The Property Frontline developed the Modular Investing System (MI System) to provide clients with the ability to use a tailored mix of strategies and efficiently build profitable portfolios that create lifetime income.
Debra Beck-Mewing is the CEO of The Property Frontline, and has more than 20 years’ experience in property investing, Australia-wide. She has used a range of strategies to build her property portfolio including renovating, granny flats, sub-division and development. Debra is a master in sourcing properties that have multiple uses and multiple exit strategies, and is a passionate advocate for increasing transparency in the property and wealth industries. She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business. A skilled communicator, Debra is a speaker, author, host of a range of podcasts, Editor in Chief of Property Portfolio Magazine and participates on numerous committees including the Property Owners’ Association.