How will COVID-19 affect the Australian property market?

This is the question on everyone's lips and certainly everyone has an opinion. We have been fielding questions from a few of our clients regarding the economic uncertainty caused by COVID-19. Whilst nobody really knows how long this health crisis will last or what sort of effect the downturn will have on the property market in Australia and around the world, we can look at past data for guidance. 

Historically, the property market has performed well and been resilient in times of economic shock. 

Property market Resilience - Corelogic

Source: Webinar - Corona virus Threat or Opportunity for the Housing Market (Terry Ryder Hottspotting.com.au


While sentiment is currently low, the other driving market factors of demand from a growing population and a shortage in stock both remain strong. Coupled with these, the cushioning effect of the Federal and State Government stimulus packages will likely contribute to a strong rebound.

Clients in a strong financial position, remain confident as good buying opportunities continue to appear. 

According to Industry commentator Terry Ryder, the regional areas of Australia that have strong industries other than tourism, will be relatively insulated from the current crisis. We are seeing evidence of this in our own deals in regional Victoria and New South Wales. For example, Geelong and Ballarat have both presented some of the best buying opportunities in the country over the last seven years. Bendigo is another town that should be added to the watch list. With a low barrier to entry (prices starting at $380,000) and excellent buying opportunities consistently below $450,000, the returns are very strong.

Growth continues to be robust in the three major regional towns.

Regular infrastructure projects are being approved which in turn is reinforcing confidence in these cities. Rental yield is stronger than metro Melbourne with some of our recent clients in Bendigo, achieving 5% or more.

Combined with strong growth, excellent location and below 1% vacancy rates, we are continually surprised with regional Victoria's performance. This trend can generally be seen across the states with similar scenarios in regional NSW and QLD.

Thus, while there will definitely be a drop in property values (we are already seeing it), there will also be some amazing opportunities presenting themselves to both investors and first home buyers alike. 



 

 

 

 

Published on 22nd of May 2020 by Marty Stanowich
Marty Stanowich
Marty Stanowich

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