Note: This advice is general in nature and is not intended as specific personal financial advice.
There’s no denying we have all been impacted by COVID-19 here in Australia, even though the outbreak has remained under control in comparison to other countries around the world.
From pubs to beauty salons, the upheaval has been significant and it’s clear the economy will take some time to recover fully.
As an experienced project manager, many people have been calling me, wondering firstly if I have suffered negative effects and secondly if they can expect to when it comes to the value of their home.
I am fortunate in my work as a project manager to have all projects continuing full steam ahead. This is because they all have started from solid foundations and have sound feasibilities. We also have strong relationships with the big four banks and have been working on ‘slow and steady’ projects, not taking risks in the hope of big wins.
And when it comes to the wider property market, here’s my personal opinion: Don’t panic!
The gloomiest headlines from the last couple of months forecast a 30 per cent drop in average house prices, however this was based on modelling and predicted to take place over three years. It’s definitely not a given.
Some parts of the property market will take a hit but the localities where I work are not likely to because they are in growth areas and each property project was selected very strategically.
While I don’t have a crystal ball, I do believe Australian property will stand strong and even if it does drop a little bit, things will recover sooner rather than later.
Here are some reasons why I’m not fearing the worst:
After a brief break, properties are being listed again and buyers are purchase-ready
It was a shock to the property market when the Government put in-person auctions and property inspections on hiatus in April. Many property campaigns were put on hold.
However, having a month off gave vendors and buyers some breathing room. Buyers with steady employment were able to put a little bit more aside for a deposit as they weren’t spending money on dining out and entertainment. Popular websites like Domain and Real Estate.com.au reported a flurry of activity while everyone was at home, demonstrating that people still had property on their mind.
Vendors had the opportunity to tidy up their property and add to kerb appeal.
And as soon as the bans were lifted, reports shared that “Agents reaped in top results” from auctions. It seemed the break made some people more excited than ever to snap up a home.
But at the end of the day, it’s not about what the media says. It’s about the specific home or development you’re working on, the area it is in, the quality of the build and its appeal to buyers.
Interest rates are low
If you have the money to do so, there has never been a better time to purchase a home or investment property.
With savings accounts boosted by the slowdown and mortgage rates falling to below 3%, those who have been shopping for a new home for a while may suddenly find themselves with extra spending power.
Overseas interest will peak
Australia has cemented its place as one of the safest places in the world thanks to our swift response to the COVID-19 crisis.
There’s no doubt this will improve our nation’s appeal to foreign buyers and expats who are ready to move home. Many will seek brand new or recently upgraded luxury homes. They will be willing to make a fast offer so as not to miss out, meaning these types of properties should avoid dramatic dips in value.
Beautiful, good quality homes are always in demand
When property prices fluctuate in Australia, it is often due to an area changing in popularity because of transport, amenities or employment.
If you base your decision on where to develop property or invest in a new home on data and research, you should be able to choose a postcode which will hold strong over time. If the location is close to the city fringe and within easy reach of shops and leading schools, even with a downturn, it is hard to go wrong. You may see a short term dip but the end game prospects of these areas will always be positive.
As a project manager who has completed several new builds and property development projects in various property cycles, I’m always careful when choosing site locations. I look at so much more than the basic value of the property and take the time to do a full feasibility forecast. This helps my team and I bring appealing homes to life which easily attract buyers.
So my final word is that if you have a lovely home in a good area or if you have recently taken on a new investment, there is no need to be worried about a dramatic downturn. The Australian property market has proven time and time again that small dips do happen but the recovery is generally swift.
And lastly: it’s all about what I call ‘buying right’. If you’re looking to buy or take on a new project right now, don’t grab a bargain during COVID-19 based purely on price without doing your research.