Coronavirus and how it impacts the Real Estate Market
Dear Clients & Customers
How will corona virus and the impact on the Real Estate market
After more than 30 years in the real estate business I have never seen anything like this. One thing is for sure, globally we will come out of this and resume back to our fantastic lives with some adjustments needed to ensure the next time it happens we are more prepared. Now, I'm not talking about the crap your hear about climate change, I’m talking about biological impacts to our lives like we are experiencing during this pandemic.
I believe that the world will come together more as people as a result of this global pandemic, I’m talking about people actually having time to reflect and think about family, about their kids, about their parents and grandparents and in some cases their great grandparents if you are lucky enough to have them. The time to think about their choices, priorities in life, what's more important now? how do we make our lives better moving forward when it comes to family, career, personal development and our contributions to making the world a better place tomorrow?
I'm talking about things like reflecting on the great times, and wishing you had more time, so make the most of time you have, I’m talking about respecting each other, spending more valuable quality time with family, and as a result i believe this experience will bring the best out of humanity, and these sentiments will spread over to other people, random people and make for a better world, because we now know that in instant the world could change for the worse and as caring loving humans we do not want to live in the way we are forced to live now. THIS IS NOT THE FREEDOM WE WORK FOR.
So, what about this dreadful disease Coronavirus and real estate? let me explain my 30+ years’ experience:
- I have experienced & survived the 1989-1995 worst recession we had to have thanks to an incompetent government as a 21 year old
- I have experienced & survived 5 recessions since that time including the Global Financial crisis in 2008 that lasted 2 years and impacted many people globally
- I experienced & survived the 1991 worst recession when unemployment was 13% and interest rates were 17% on home loans
- SARS virus
- BIRD FLU
- GETTING OLDER
I could continue but I think you get the idea.
What we are experiencing, and will experience for a while, is a moving target almost daily, and as a result it’s too difficult to forecast and asses the impacts. What we are experiencing is a massive health issue impacting the economy, not an economic issue as I will explain below.
This is how I see the Coronavirus impact the Real Estate market
- The last major virus outbreak was SARS, it had minimal or no real impact on the property market.
- The Australian real estate market does not really shut down with these types of threats because we can circumvent it as we have done before
- We may see fewer sales over the coming months, but property will still sell, people NEED to sell or to BUY
- The market will be impacted in some suburbs and will impact some sellers depending on the suburbs they are located.
- The market fluctuates with the supply, demand and the financial position of the buyer and the seller. BUT this happens in any market, so no real change there.
- Fewer sales over the coming months, however this will not be as dramatic as the GFC (Global Financial Crisis)
- There is huge amount of stimulus from the federal Government never been seen before injected into the economy via individuals and businesses,
- The government is in surplus which has greatly assisted the extent of the stimulus measures they have put into practice
- Cheapest interest rates in Australian history, this opens up the market to more buyers qualifying for loans which means more demand for property
- Banks are healthy and not distressed so a solid banking system
- 6 months freeze on loan repayments, so even if you lose your job you have 6 months to find another job
- Despite the 6 months freeze on repayments, banks are open for business and competing to lend money which is a positive sign of financial liquidity
- We do not have a credit squeeze, the financial markets are quite liquid
- Australian dollar is lower and may decline further bringing foreign investment from global interest
- Immigration will continue and I predict more people will apply than ever before to immigrate to Australia
- Confidence has taken a big hit, BUT the market continues to trade
- I believe there will be a sharp recovery once this virus is over
Watch this space, as I will try to bring you intelligent, experienced knowledge & commentary of the real estate market to keep you my clients & customers as updated.
Stay safe, warm regards
CEO, LREA, DIP Prop