The Coronavirus pandemic and the consequent economic impacts are impacting property markets and will give rise to opportunities to buy well – as is usually the case in tough economic climates for those who are able to do so.

First, there are some important considerations:

  • Valuations are problematic.

    1. There is a much higher degree of uncertainty about the value of a property now than there was prior to the pandemic.
    2. Normally the market is what economists call deep and liquid so that valuations made by reference to comparable transactions are a good guide. Right now there is much lower depth and liquidity in the market and so while many are talking about how much prices have or may fall there is very little reliable evidence to base a valuation on.
    3. Much of the property on the market is a function of distressed vendor activity.
    4. The size and duration of the recession which is going to follow the pandemic remains uncertain and this will ultimately be a key driver of prices.
  • Residential property investment can be lower risk than commercial property investment

    1. The Coronavirus epidemic has exposed the degree of risk in some sectors of commercial property in a way which had not been so clearly visible in Australia’s long run of economic growth.
    2. While residential property vacancy rates have increased and rents have been impacted – particularly in some geographies – the degree of impact is much less than in many commercial tenancies such as office or specialty retail space.
  • Buying the right property is always important and remains so

    1. A cheap price does not turn a poor property into a good property.
    2. Your focus in buying needs to remain on buying property which has the underlying attributes to support capital growth in the long term
    3. If you can buy the quality property cheaper now you will do will
  • Off-market sales will be a larger share of the market

    1. Many vendors are reluctant to put a property on the market in the current climate as:
      1. They don’t want to incur the marketing costs of a campaign in such an uncertain climate
      2. They don’t want to risk a failed sale campaign
  • The value of the property might be affected by a much larger amount than the vendor is prepared to accept

 

In this climate more than ever we recommend seeking advice on any property purchase you are considering.

  • If you are thinking about making an investment call us to help ensure you buy the quality of property likely to meet your investment goals
  • If you are beginning a search or already have one underway call us to access the off-market sales not visible to the market at large
  • If you have a property you are considering buying call us to get a second opinion on its suitability and value before proceeding.

We have recently begun publishing a Buy of The Week recommendation. Each of these is a property for sale by another agent (and we have no connection with or financial interest in the sale process). An example can be viewed here. If you would like to receive our Buy of The Week recommendation and are not currently receiving it click here to subscribe.