Most major property markets around the nation are well-placed to withstand the coronavirus crisis, according to the Property Investment Professionals of Australia (PIPA).
PIPA Chairman Peter Koulizos said the many financial support programs available would 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 five to 10 per cent at most but rebound relatively quickly.”
Mr Koulizos said 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,” Mr Koulizos said.
“But low interest rates will help property owners as well as business owners.
“Plus, the fact that you can defer your mortgage repayments for up to six months, which hasn’t happened before in my lifetime.”
However, rental markets are likely to experience tougher market conditions for a period, mostly due to the influx of holiday lets and Airbnb listings, Mr Koulizos said.
“Again, rental markets were in good shape prior to the pandemic, but there has been a significant number of holiday-related listings come 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.”
Mr Koulizos said property investors were in a good position to manage lower rents for a period of time because of interest rates of between two and three 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 life-time 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 in the past.”
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Property Investment Professionals of Australia (PIPA) is a not-for-profit association established by industry practitioners with the objective of representing and raising the professional standards of all operators involved within property investment.