Buy? Or Wait? Playing Your Cards Right During The COVID-19 Crisis.

We’re already feeling like we’re in the thick of it now, but in reality, we’ve only just begun. Staying at home will do that at to you. Is that clock actually ticking backwards?

On a more serious note, the Government has dished out a range of stimulus packages in an aim to keep businesses afloat and give job-seekers the ability to pay their rent while we’re in this social vacuum.

There is little doubt much more than this is needed to get us all through this time. Many of our longest, and strongest, retailers have closed up shop. Centrelink lines are a block long. I’m sure we all agree government initiatives aren’t even remotely satisfactory to this point.

We’re headed for a global recession. It’d be a Christmas in July miracle if it didn’t hit us soon.

So, what if you want to buy property right now?

A virus that keeps you at home doesn’t necessarily stop you from buying a home.

If you’re thinking of buying, there’s no time like the present. For the next month or two, you’ll be able to leverage the current uncertainty and vendor fear factor to likely secure yourself a good deal.

Low-balling the market in times of economic (and psychological) stress can pay off if you do it right…and with tact, of course.

Based on the current state of affairs it is highly probable the property market will drop throughout the coming months. How much of a decline, and for how long, are the golden ticket questions.

Media has reported that if you’re in Sydney or Melbourne, you may see property prices fall up to 20% (worst case scenario). That’s if we see our unemployment rate hit 10%, which is entirely possible with the current closures of businesses and airlines grounding flights.

Sensationalism sells – don’t forget this. Now is not the time to buy into potential media hype. It doesn’t help anyone to fuel click-bait panic. I’m not a fan.

Historically, property price decline has not necessarily correlated with global recessions and economic crises. Property tends to be a stable foothold at times of economic distress, even while stock markets are expressing great volatility. 

Based on historical factors, one could conclude that property prices may not be all catastrophic doom and gloom over the coming months. With an unprecedented situation, however, one can only use logic and smarts to speculate.

We are moving into the natural down cycle in property which is annually experienced during the Winter months. So predicting if property prices will drop, and whether it be by a little, or a lot, is a tough prediction to make. They were most likely going to drop at this time of year anyway.

Another factor is the length of the COVID-19 outbreak and the pace at which Australia is able to control its course. At this stage, based on global statistics and information, the COVID-19 pandemic appears to be an acute crisis, with a short-term half-life.

My view is that prices are likely to drop and the ability to capitalise on lower prices during this time would be beneficial for my clients wishing to buy into the market. There is a small window I believe folks – and this needs to be tapped into correctly and optimised.

Of course, inspecting your future home may be a little different now with social distancing. You may find yourself being involved in a real-time video tour of a property together with yours truly.

Having undertaken real time inspections this week via Facetime and WhatsApp, I can assure you these are detailed and specific. No stone goes unturned and no question goes unasked nor unanswered. It’s the way of the now and likely the future!

The plus is that more properties are now being listed for sale via private treaty – the transparency of this sales method is far greater than of that with auction. Buyer advantage here.

Online auctions are an option, but not an option than I believe many will utilise during this time. Belle Property has already switched across to private treaty sales as a current prefered sales method. Others will follow soon enough. 

But before you get to the contemplating acquisition stage, let’s think.

Firstly, assess your own situation.

There’s going to be an economic aftershock from this horrid virus. Ask yourself, will your industry be affected? Can you say with 100% certainty that you’ll maintain your employment? If you have doubts, might be an idea to put your property purchase on ice.

Secondly, plan for the worst-case scenario, financially.

None of us have a crystal ball. At any time, things could go completely pear shaped. But as you know we’re in special times here, so make sure you have a financial buffer.

Also, consider the potential of one person in a couple losing their ability to contribute to the mortgage. There are going to be considerable job losses. We’ve already seen the impact on the hospitality and travel industry.

These job losses won’t be forever.

The pandemic will end and the economy will bounce back.

However, we do have some of the lowest interest rates on offer at present, so take that into consideration. Lower interest = smaller repayments. Better yet, the current mortgage deferment options available through many lenders at present are worth your while attending to also.

Thirdly, seek out good advice.

Talk to experts on the market and consider many different mortgage options. Talk to a broker to find out the best rates and package deals.

For those who purchased property within the past 6 months in a strong market.

Remember property is a long-term investment. So, don’t sweat it too hard. Just make sure you don’t spread (poor choice of word at the moment!) yourself too thin – you don’t want to have to start paying mortgage insurance because your house value has dropped significantly.

Also consider the high probability post the COVID-19 situation – a market boom. Historically, after each major economic crisis there is a surge in the property market. The prices of the past 6 months may well be petty pennies once the imminent recovery cycle begins. It’s just a hiccup for now – don’t forget to keep this rational perspective.

What will happen next?

If you’re in a good secure place, financially and professionally, now could be a great time to buy and get ahead of the game.

When late Spring / Summer begins, we’ll hopefully see the benefits of government stimulus/recovery packages boosting the economy, lower interest rates and a mass of renewed optimism in buyers as the worst of COVID-19 is out of our lives.

This will be a recipe for the market to go viral (sorry, couldn’t help myself). Buckle up and get ready for this climb. It’s likely to be very fast.

At that time it will be goodbye COVID-19 Cabin Fever, as I anticipate we enter a 5 year macro cycle that will see property prices increase.

Brighter days are coming. Enjoy your time at home for now.

Stay safe and healthy folks.

Kitty Parker 

Director of K&M

M: +61 (0)415 242 979

E:  [email protected]

W: www.kittyandmiles.com.au