With this black swan event stifling our economy there has been a lot of uncertainly in the property market.
With uncertainty though comes both winners and losers.
Anna Porter, Principal of Suburbanite, valuer and market commentator explores who are the players in the market and how they will be impacted.
She shares that while the economy has been tipped upside down and many Aussies will struggle to pay the rent, let alone bag a property bargain, there are some winners around.
“The Government stimulus will prop up some businesses and employment for a period but it seems that may just allow some businesses to go broker slower,” says Porter.
“If unemployment worsens and more businesses struggle to reopen over the next 6 months then this will have a flow through to the property market,”
“I believe the losers will be business owners who may come up against a cash crunch and need to sell assets to scrape through.”
So, if business owners are not able to fund the cash short fall, investment properties or even their own home may go on the market at a time when the market is already soft.
This could put further downward pressure on pricing as the level of stock could increase dramatically.
“Some landlords too will find these times challenging if their tenants stop paying rent by way of full or part deferral, or seek a rental discount,” says Ms Porter.
“In this instance, some landlords will have to sell the property as they may not be able to carry the cash flow through to the other side, or won’t be able to jump over the higher loan repayments they may face if they too defer their own mortgage repayments.”
According to Porter, the winners, however, are Government employees.
“These individuals are the individuals who have a stable income or businesses that have stable contracts, especially in Government or medical, and can certainly take advantage of the softer market conditions, be it by way of better buying power for their own home or investment property, or getting cheaper rents,” says Porter
“The other big winners from this will be first home buyers.,”
“With talks of abolishing stamp duty, low interest rates, better buying power and less buyer competition, first home buyers with a stable income will certainly make the most of this market.”
Whilst not everyone will be in a winning situation, Porter shares now is not the time to panic and sell your property as there are many lifelines available and we will get through this time.
“Once out the other side, there will be increased demand and a stronger economy and increases in value,” she says.
“If you have no choice but to sell, we urge you to get in touch with the higher performing agents in your area as now is the most important time to use an agent with experience and a proven track record.”
Porter also touches on the buying opportunity that many are caught up in.
She explains that for some people they will be able to pull the leaver and buy shares or property while the prices are suppressed. But this is not the strategy for everyone.
“Some people should definitely consider investing now but not everyone,” shares Ms Porter.
Below are some of the criteria we have put in place to safeguard our client’s and investors in general for a self-assessment of whether you should invest or wait it out.
It is important NOT to invest if you meet some of the following criteria:
- Your job security is at risk
- You don’t have stable income
- You don’t have any savings behind you
- You would not be comfortable with the property going backwards in value more after you purchase it, before it goes back up
- You may need to sell the property in the next 12-24 months
However, Porter acknowledges that there are some people who should consider investing during this time. Here’s her criteria:
- People with income security, and/or
- People with savings
- If you are comfortable to take a risk with potential upswing at the other end
- Are comfortable with the market fluctuating in the short term and can take a long term view
- Are able to hold the property for at least 12-24 months and wait for the economy to recover