Nobody quite knows where Australia’s COVID-19 recovery is leading, but investment veterans are comparing the conditions to those of the roaring ’20s.
Speaking to Smart Property Investment, Pure Property Investment director Paul Glossop said that property investors only need to look back at history to see what’s coming next.
“When you look at the last four to five major factors to the economy as far as downward trends or major impacts to the economy, i.e. the last four or five recessions since the ’70s, property over the following five years has only increased. And in a lot of cases, it increased exponentially over those years,” he said.
He suggested that today, property investors are facing a similar predicament to that witnessed in the period following the first World War.
According to Mr Glossop, “The reality is, unless there is an existential shock, i.e. something that changes from an economic impact… I don’t expect we’re going to see a major downward trend anytime soon.”
Mr Glossop said that a post-COVID version of the roaring ’20s is “something that looks very likely – at least in the first three to five years, based on economic positions, based on stimulus, based on cost of money, based on essentially all those main factors we look at”.
“I think we all need to take a quick breath to go look at what history does when you go through growth cycles.”
While Mr Glossop admits that “first home buyers are getting cooked”, he’s quick to add that “that’s probably the only real market segment that looks like it’s become squeezed”.
In comparison, he said that “investors are ramping up”.
He observed that owner-occupiers are sort of oscillating, but remain “very, very strong”.
“So, new credit is looking like it’s going to go through a boom year.”
Last month, research by the Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) found that 80 per cent of property investors said their investment intentions for the next six to 12 months were not affected by the coronavirus crisis.
At the time, PICA chairman Ben Kingsley said, “Investors are confident about the times ahead, with many intending to purchase over the next year to take advantage of the burgeoning buyer’s market.”
“It’s clear that record-low interest rates, as well as the resilient nature of property during turbulent times, are inspiring investors to continue with their plans,” he said.
Fergus Halliday, Smart Property Investment, 24 June 2021