COVID-19 is far from over but as the impact of the pandemic continues to shift and evolve, the effect on the Australian real estate market is becoming clearer. As predicted, property prices are falling in many markets, while in some cities less affected by the recent lock-downs, such as Adelaide and Perth, the market has enjoyed a price push that has seen the value of property investments grow – something that has been good news for investors already in those specific markets.
The Impact of Panic-Selling
In Victoria, though, where a hard Stage 4 lock-down shut down businesses and livelihoods in a range of industries, the reality that we are in a national recession has hit harder and has already seen property prices drop, with CoreLogic data released in August 2020 revealing Melbourne property prices are shrinking at an alarming rate, as national housing values recorded losses for the third consecutive month to July. The same data showed that the Victorian capital lost 1.2 per cent across July 2020.
Yes, it’s concerning news for many, but it’s important to remember that, for many investors who already own property, there is no need to panic. Property is, after all, a solid long-term investment. And, although there are times when property prices do drop, property does regain its value and grow again – even if it takes years. Panic-selling now, driven by fears that prices may plummet further, will only lead to property prices continuing to fall. If you can maintain your current mortgage repayments, or perhaps negotiate a period of deferred repayments while you find your own financial feet, the recommendations from property investment experts is to hold on.
For those who can’t, sadly, it will mean that many investments are lost.
Falling House Prices Mean Financially Stable Investors Can Benefit
On the flip-side, while that is obviously heartbreaking for many of the property owners who will be forced to sell, the positive that comes from that is access to more affordable property for buyers who had previously found it challenging to get into the market – buyers whose income has not been negatively impacted by recent employment shifts.
For savvy investors who have the available funds to purchase, it can be a time to buy strategically and add to a property portfolio – financial investments that will create impressive returns in the long-term future.
Consider Commercial Property Investments
With a growing number of commercial properties available, it is a smart time to explore diversification of your residential property portfolio too – but only if you have the financial buffer to help weather the storm that is still to come.
Talking to commercial property investment specialists and your own financial advisers, though, is always recommended.
Until COVID-19, commercial properties were regarded as safe investments that produced both reliable income streams and capital gains, as ongoing population growth increased the value of this scarce real estate.
In the current climate, though, local strip shopping commercial property opportunities may offer better bargains in the shorter-term as commercial real estate in large-scale developments, such as shopping centres and hotels precincts, struggle to regain their footing as the long-term impact to the tourism industry tries to recover.
Professional Advice is Valuable
Making any significant investment decision during a pandemic must be done carefully, led by the wise advice of professionals who know the ebbs and flows of the property market.
By not rushing into any investment choices, and being realistic about your ability to hold on to your investment, there may be bargains to be found – and that means positive financial growth for your future.
Once you are armed with the right research, talk to our mortgage brokers at Lending Specialists, to help you find the best possible property loan.