Coronavirus Market Update
If you are using the current economic situation to take stock of your current financial position, please take advantage of our knowledge and experience. We are on hand to offer an unbiased, educated analysis of the current market, and offer an insight into what the market is expected to do. Email, message or call; I am happy to set up a time to have a chat. The market is balanced, and there is huge potential for a strong response once we start to see the economy open back up.
The last month or so has been a true test of the resilience of our market. In the initial few weeks, the landscape was constantly shifting, but we currently sit in a state of balance. With the initial shut down came an influx of calls from investors who were worried about income and the value of their rental properties. There was a sense that rental payments would stop, and the value of these properties would fall significantly due to the fact that they were no longer generating an income. This led to a sense that there was going to be a surge in panic selling. The announcement of the job keeper payment resulted in the immediate stop of such enquiry from worried investors. The banks also got on board early, announcing 3-6-month grace periods, and this coupled with the job keeper announcement was enough to give investors confidence that they could sit, hold and wait. There was also an immediate pulling back from sellers who were about to hit the market and offer their properties for sale. This put an almost instantaneous stop to the supply of new property hitting the market. This had a positive impact for the properties that were on the market as they were the beneficiaries of greater market demand. We are seeing some of these properties now coming on to the market, and in my eyes, there is no better time to be selling. There are good quality, qualified buyers in the market place, and there is a limited supply of properties currently on the market. Lack of supply, results in strong outcomes.
In the initial 2 weeks, the impact across the market saw some buyers pull out of contracts, and several finance approvals were declined, but since this time we have seen a positive flow of finance approvals, and an increase in confidence from the buyers who are currently active in the market.
There has been an impact in regard to the level of activity in the market, but the quality of those looking has not been impacted. By quality I mean qualified; these are buyers who are active and financial; they have either sold, are gainfully employed and working in sectors largely unaffected by the current market conditions; or cash buyers who are looking to make opportunistic purchases.
The beauty of opportunistic buyers is that when there is a market of short supply, they generate considerable competition, which may not be at a price level we wish to see but they are an important part of the sale process. As an example, it is like a low bid at an Auction, these bids are not at a price level that will buy the property, but it fuels competition and the bid gives everyone else ‘permission’ to bid. If you have a situation where there are a number of opportunistic buyers, this creates a healthy level of competition.
The road ahead is filled with talk of unemployment sitting around 10% at the end of the corona crisis which highlights that interest rates are going to remain at all time low levels. It is my opinion that interest rates will remain low for some time; by some time, I would suggest a number of years (which is an opinion only). As most economists will tell you the cost of borrowing is at an all-time low and there has never been a better time to borrow money.
Taking all of this into consideration, I expect that property prices will remain balanced for the next 12 months and the cost of borrowing will remain low. If you are considering selling, now is a good time to take advantage of the lack of competition and supply. If you are considering selling in a few months take the opportunity to have the value of your property assessed and we can also help, make recommendations based around what work is and isn’t beneficial in this current climate. We are here to help.