If you're looking to invest in the property market in the next 6-12 months, you're probably wondering what COVID-19 means for your plans. We spoke to property market expert Sandy Paravizzini from Resolve Finance for a perspective on the market moving forward.
"History shows us that the Australian residential property market has been fairly resilient against negative economic movements," says Parvizzini. Analysis from the CoreLogic demonstrates that the impact of economic shocks on the annual growth rate of housing prices has been fairly contained, and recovery from downturns has been relatively quick. A key lesson Paravizzini pulls from the chart below is that "major losses in the share market, or overall economic recessions are not necessarily predictors of declines in housing values."
It's impossible to predict the overall impact of COVID-19 on property markets, and there are numerous factors that could drive price growth or drops over the short term.
"Investors sometimes turn to property in times of crisis", says Paravizzini. That can increase demand, which in turn increases prices. He notes that, fundamentals like "like reduced supply of new homes; an increase in demand for property; low interest rates; population growth; and a lower number of homes available to rent" are likely to persist once the dust settles.
As interest rates hit record lows, Paravizzini suggests buyers with preapproval consider reviewing their deal. Those looking to apply for a home loan in the near term, might face tighter lending criteria, but if approved will benefit from lower rates.
Paravizzini believes a key investment lesson in crises, across the board, is to take the long view. He cautions buyers to avoid trying to time the market and instead "focus on properties that are best placed to grow in value over a longer period of time, while keeping in mind that there can be peaks and troughs along the way."