Covid-19 is a global crisis and every sector has had to adapt to the changes brought in by this pandemic. Perhaps, the real estate segment has been touched in a more poignant way because the real economic impact is yet to unfurl in its entirety. The Australian government banned on-site auctions and open houses with regard to social distancing, and the real estate market complied immediately.
Does buying and selling property take a backseat then? No. Even with shrinking economies around the world, property is still the safest investment. It still instils the highest confidence during a crisis. While many investors, home owners and buyers are putting up decisions on hold, the property market has witnessed discounts, low prices, and lesser competitions.
This is why property development is now a great investment even during a crisis. Here are some arguments and trends in favour.
Stability of property investment
Property is a long-term, physical asset even when economic impact depreciates its value. Compared to stocks, property has always fared better in times of global pandemics and will always find willing investors. Property as a physical asset provides the highest sense of security. In all likelihood, sellers will offer discounted prices, and buyers can make a bargain advantage.
Low interest rates
Lower bank rates during the crisis is as good time as any to invest, especially for first time homebuyers and cash-rich investors. Interest rate cuts have made owning a home or investing on properties the cheapest in the current market. Banks are also doling mortgage deferments or holidays that will prevent forced or mortgagee sales and thus, won’t undermine market confidence.
Housing supply decline
The real estate has few notable large projects at present. This means that the coming years will witness a shortfall of housing accommodation when millennials will hit the property market. Due to affordability issues rising from an insecure employment scenario, renters will also enter the market looking for housing. The returns on investing now looks promising therefore.
Secure industry foundation
In times of crisis when the impact is imminent on national economic health, people tend to veer towards quality assets. Brick and mortar assets have stood the test of time and more so because 70% of property owners are long term home owners. The banking system in the country is stable and sound, combined with low mortgage default rate. The property segment is looking to be a secure investment vehicle.
If you are financially secure, take a long-term perspective rather than giving in to short-term reactive thinking. The crisis induced economic scenario might deter you from spending but think about it:
- the property prices are low,
- there are more suppliers in the market than buyers,
- reduced competition for locations,
- sellers more likely to accept offered price rather than waiting for asking price,
- property prices always soar after the end of a crisis event.
Are you in an analysis paralysis? Trust an expert like Frank Carioti who live and breathe the market to provide direction, guidance and results,
