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 says the many financial support programs available will 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,” Koulizos says.
He notes that during the GFC in 2008, prices were ‘forecast’ to fall by 30% or more, but in many locations they held their ground and even strengthened over the months afterwards – and then rose strongly in both 2009 and 2010.
“While the coronavirus situation is somewhat different, given it’s a temporary public health emergency, I believe property prices may temporary soften by 5-10% at most but rebound relatively quickly,” he says.
Koulizos says most property markets were experiencing strong conditions prior to the pandemic, which would help to insulate them over coming months.
And, 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,” Koulizos says. “But low interest rates will help property owners as well as business owners.
“Plus, there is the fact that you can defer your mortgage repayments for up to six months, which hasn’t happened before in my lifetime.”
Rental markets are likely to experience tougher market conditions for a period, mostly due to the influx of holiday lets and Airbnb listings, Koulizos says. But the low level of vacancy rates in most markets around the nation will help to counter-balance that.
“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 says.
“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.”