The big question shared by many amidst the spread of the Coronavirus: How will this continued pandemic impact residential property? With a decline in business activity and the global share markets dropping, it’s no doubt that people believe the next aspect to come to a standstill will be property values. Whilst research on the market outcomes is everchanging, a crash in property prices may not be the case.
Australia stands the test of time
Our history tells us that Australian residential property has historically fared well against negative economic shocks. Evidently, in the 1987 ‘Black Monday’ stock market crash, where the Australian share market lost around 23% of it’s value in a single day, housing values were not so much affected, and by October 1988 double-digit growth was seen partially as a result of financial deregulation. When we faced the GFC in 2008 property did decline temporarily, although rate cuts and government assistance saw this was short-lived.
Share market vs. housing market
The share and housing markets also perform at different levels. Based on a recent article from CoreLogic, it appears that property response is delayed when it comes to large-scale economic trends, therefore allowing it to evade great decline or instability. A reason for this is that housing is used as a consumption good and is therefore less likely to be viewed as relative to equities.
Value is not set in stone
In the coming weeks, property transactions may fall significantly, but how this will impact property value is not set in stone; the values will depend on how long coronavirus is perceived to last, and the general employment stability of buyers – not to mention the increased isolation cases, where there are simply less people out and about looking. It’s important to remember all these aspects are only temporary, and unless current conditions pose a drag on incomes for a significant period, property prices themselves may not drop.
In such times, it’s important real estate professionals adapt to the way they do things. We, in particular, are combating the coronavirus by offering private inspections for all clients on all our listings. We are also offering a virtual viewings of properties, online auctions, and virtual appraisals, for all those who do not wish to leave the house but still need to transact. Our efforts are to ensure we assist in maintaining the general confidence of those participating in real-estate transactions currently. We are here and capable to help fulfil your real estate goals in both the slow and the flourishing markets – reach out at any time!
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