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Property investors are being urged to take comfort in knowing the current economic volatility has a cause with a defined solution and a relatively defined time frame.
During a recent podcast of The Smart Property Investment Show, Propertyology’s head of research, Simon Pressley, reminded investors that this is a temporary problem, which will pass.
“How this will affect property markets is determined by how the virus affects Australia’s economy. The economic conditions always have the biggest influence [on property],” Mr Pressley said.
Australia is one of the very few countries that has a balanced budget, and that government debt is the lowest in the world should provide investors with some comfort as Australia is in a strong position to cushion the impact of the COVID-19 outbreak.
Mr Pressley highlighted that the temporary disruption will pass, with investors likely to cash in on some strong opportunities.
“When we get out of our cocoons in a few months time, there’s going to be an enormous release of pent-up demand.”
“All the things we haven’t been able to do, we will be doing that stuff. That will stimulate the economy quickly, then we have the stimulus packages on top of that; we have credit supply with the gates being open; we have all-time record-low interest rates, and we have property yields of 5 per cent.”
“That is when people are going to make some really good coin,” Mr Pressley said.
For the property sector, Mr Pressley believes strong support from the government will mean investors won’t have to sell wholesale assets.
The property guru also explained that once we are through the crisis, the property market will return back to usual.
“The other side, it largely looks like how Australia was positioned before this started. To picture that, listeners need to remember the middle of last year with the end of 2019 early 2020 with large parts of Australia running at double-digit price growth.”
“They are the fundamentals because credit is cheap, it is available, housing supply is tight, building approvals are low. When we come out the other side, those things will still be there with a $213 billion dollar stimulus,” Mr Pressley said.
Mr Pressley said the most important question is never when, but where, as all investors should invest if they can afford to.
“What you need to look for are locations that have a diverse range of industries, locations that have not had a strong period of property price growth. Locations that today have controlled housing supply and then a big body of decisions where job projects have been approved but yet to unfold,” Mr Pressley said.
Australia will go into a technical recession, but that won’t last forever, so when you hear the recession word, the rising unemployment rate understands why and knows we have the arsenal to deal with it, Mr Pressely concluded.