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Property investors ‘well placed’ to withstand COVID-19 crisis

management
1 minute read

Property investors ‘well placed’ to withstand COVID-19 crisis

by Emma Ryan April 29, 2020 1 minute read

A real estate expert has said that most major property markets are resilient enough to survive the pandemic, noting those that do take a hit will rebound relatively quickly.

Peter Koulizos
April 29, 2020

According to Property Investment Professionals of Australia (PIPA) chairman Peter Koulizos, the many financial support programs available will help to prevent any significant property price falls over the medium term.

“Whenever there is a global financial shock, some commentators predict huge property price falls, which ultimately don’t happen,” Mr Koulizos said.

“During the GFC, prices were ‘forecast’ to fall by 30 per cent, but in many locations they held their ground and even strengthened over the months and years afterwards.

“While the coronavirus situation is somewhat different, given it’s a temporary public health emergency, I believe property prices may temporary soften by 5 to 10 per cent at most but rebound relatively quickly.”

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Mr Koulizos noted that most property markets were experiencing strong conditions prior to the pandemic, which would help to insulate them over coming months.

“Compared to other economic downturns, existing low interest rates and inflation will also protect property markets,” he said.

“Unemployment will go up – there’s no doubt about that – which is a similarity with other economic downturns. But low interest rates will help property owners as well as business owners. Plus, there is the fact that you can defer your mortgage repayments for up to six months, which hasn’t happened before in my lifetime.”

That being said, Mr Koulizos acknowledged that rental markets are likely to experience tougher market conditions for a period of time.

“Again, rental markets were in good shape prior to the pandemic, but there has been a significant number of holiday-related listings coming on to the market over recent weeks, which is likely to continue for some time yet,” he said.

“So, rents will trend lower due to this extra supply, which will drag down median rents until those leases are finished and domestic tourism is reopened.”

Looking ahead

In terms of what the future holds for property investors, Mr Koulizos said the majority are in a good position to manage lower rents for a period of time “because of interest rates of between 2 and 3 per cent on many property loans”.

“It is far better for this to happen now with most sales and rental markets in healthy shape before the crisis began,” he said.

“Coupled with once in a lifetime interest rates, property owners are well placed to ride out any temporary downturn.

“Prices aren’t going to go up or down by 30 per cent. There may be a slight downturn in prices over the short term, but real estate is a long-term investment that has historically shown resilience time and time again.”

Property investors ‘well placed’ to withstand COVID-19 crisis
Peter Koulizos
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About the author

Emma Ryan

Emma Ryan

Emma Ryan is the deputy head of content at Momentum Media.

Emma has worked for Momentum Media since 2015, and has since been responsible for breaking some of the biggest stories in corporate Australia, including across the legal, mortgages, real estate and wealth industries. In addition, Emma has launched several additional sub-brands and events, driven by a passion to deliver quality and timely content to audiences through multiple platforms.

Email Emma on: [email protected]com.au

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