Why now is the right time to buy a house
With global stock markets swinging wildly from one extreme to the other as the coronavirus Covid-19 continues to spread, investors are feeling cold feet.
But according to property experts, the tough economic climate could actually be viewed as a lucrative opportunity.
“In times of economic upheaval and share market crashes, people head for the safety, security and solidity of bricks and mortar,” hotspotting.com.au CEO Terry Ryder told Yahoo Finance.
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The last time Australia faced a major economic crisis was the global financial crisis of 2008. But during that time, while some experts were forecasting a real estate crash, house prices in Australian capital cities actually rose 13.6 per cent in 2009 and a further 6 per cent in 2010, Ryder pointed out.
“The evidence so far, including the latest auction clearance rates and price data, indicates that property is hanging tough in the face of the virus crisis.”
According to realestate.com.au chief economist Nerida Conisbee, the property market is doing “well”, with clearance rates high and buyer demand up thanks to all-time-low interest rates, and another emergency RBA rate cut on the horizon later this afternoon.
“I have no doubt that once COVID-19 is contained, we are in for very strong economic growth.
“With so much stimulus and everyone back working at full capacity, it will be a solid recovery. Property will do very well from there,” she said.
What should I do and where should I buy?
Don’t rush; play it safe
While buyers may be keen to capitalise on lower prices, Metropole Property Strategists CEO Michael Yardney warned against buying anything you normally wouldn’t, and letting the news cycle affect judgement.
“Remember: don’t make long-term decisions like buying a home or an investment property based on the last 30 minutes of news,” he told Yahoo Finance.
“This is a great time to buy a home or investment property at a price that you were unlikely to be able to get a couple of weeks ago when the property markets in big capital cities were booming and there were more buyers around than sellers.
“It is likely that human nature will cause many would-be buyers to sit on the sidelines for a little while until things become more clear, which means that sellers will be more amenable to accepting offers rather than holding out for a top price.”
Conisbee advised buying “good quality property” in locations that are under-supplied for housing where it would be easy to lock in a tenant.
“If you aim to hold for as long as possible, you will more likely do well no matter what conditions you buy in,” she said.
Some big cities and regional hotspots will do well
Australia’s capital cities will continue to see strong growth in home values this year, said Ryder, but so will areas further afield.
“I also think that good regional centres, particularly those not reliant on tourism, will be relatively unaffected by the virus and will continue to show good growth – for example, regional Victoria. The capital cities of the major resources states will do well, that is, Brisbane, Perth and Adelaide.”
Workplaces under question
When choosing the right property to purchase, it’s not so much about location as it is about the type of property, cautioned PIPA chairman and University of Adelaide academic Peter Koulizos, who advised against commercial property.
“Many office workers will be working from home and there will be less need for office space,” he said.
“Once life gets back to normal and assuming productivity from workers does not drop markedly, many businesses and employers might come to the conclusion that they can continue to operate with less office space, thus decreasing their costs.”
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