Key points covered in this webinar:
Leading the way – Property always leads a recovery. Historical evidence of past crises – the GFC and the recession – showed house prices grew in value, often significantly. No two crises are the same, but one thing that is always the same: the way humans respond. We will bounce back quickly and strongly.
The current situation – Doug says listing numbers at Starr Partners are down 65-70 per cent year-on-year, sales volumes are down 50 per cent, investor numbers and buyer numbers have each dropped by half, and 5 per cent of their tenants have approached them for rent relief.
How long will we be here – The change in government dialogue in the last 7-10 days gives hope that we are outside the worst of it.
The positives – The GFC was an economic shock and this isn’t that – we were healthy as we approached this, with a balanced budget and low debt at 20 per cent. To attack this virus the Government has economic arsenal to provide economic support programs. Also, the housing supply situation had been expanding in lead up to GFC, but in the two years leading into COVID-19, Australia has had a tight housing supply and low building approvals. If there is such a thing as a good time, this is it and it will help us get out of it quicker.
The rebound – How quickly we rebound depends on the depth of the recession and the effect on the market. We could see a high volume of sales at the other end of this due to current conditions (low interest rates), economic stimulus, and a need for people to move post-COVID-19 due to things like debt or divorce.
Listings – When they unlock us the very low listings we had will be even lower. Buyers will come out first, and that will force prices rapidly due to so little volume of property to choose from. The germ hasn’t made interest rates rise, it hasn’t affected credit, so there should be a strong bounce-back for property prices.
The banks – The banks could end up being our saviours as the Big Four have huge cash reserves and are doing well – we learned from GFC that having strong banks was important.
Western Australia – The market was already low and coronavirus hasn’t changed fundamentals for them. But if China stimulates the economy it could see another mining boom and WA and Queensland markets would benefit.
Best practice – Agencies should be asking ‘are you market-driven or marketing-driven?’ Knuckle down and get back to basics. Now is the time to connect with people more than ever before. Start making calls, no pressure, just asking how people are and having meaningful conversations. At some point they will need to sell, and they will appreciate that phone call you didn’t need to make.
Recession – It’s very plausible that Australia will be in a technical recession at the end of this. That just means two consecutive quarters where the economy didn’t grow and that should not surprise us. A lot of businesses will reopen have the economic arsenal to kick the economy along once the germ is gone.
The experts – Seek credible sources but remember, a lot can change for the better and for the worse very quickly.
Resilience – Australia is already showing early signs of resilience that will see us through. We’ve shown it historically too – of all the main crises Australia has experienced in the last 100 years (WWI, Spanish flu, WWII, recession and GFC), in the three years immediately after every one of them, Australia’s GDP grew in excess of six per cent.
Stimulus – It always starts with the property market and they are confident we will see this again. Property is always a priority because if we have confidence in the value of our asset, we start the day with a positive mindset which determines how much we do or spend.
The media – It’s currently very negative, but we should start to see good news soon. At the moment it’s wise to allocate time to look at news once a day and not go in and out of news all day.
Investors – Housing supply is tight and interest rates are low – and they are fundamental factors in investing. Most of fundamentals will remain the same after this.
Tasmania – The market there has been strong for a long time but it was coming to an end of that cycle. They have a higher reliance on tourism, so do Canberra and Darwin, which seems bad now but there could a boom coming their way when we are out of this. The low interstate interest there makes it very resilient.
International investors – There isn’t as much money coming out of mainland China due to spending restrictions put in place by the Chinese Government. We might see more from subcontinents like India. Australia needs foreign capital, especially for residential supply and developers to commence construction, but there are too many uncertainties with foreign policy and borders to say what will happen here.
Final thoughts:
- It’s never a bad time to buy an investment property. Where is a better question – think about industries with the healthiest outlook and factor in how they are affected by coronavirus. Look at areas where those industries exist, and focus on the supply side of things – a tight supply is important for price growth.
- Be the architect of your own destiny. We have very little control over this so take each day as it comes.
- Reach out and connect with as many people as you can.
- Real estate professionals are regarded as leaders in the community, so think about how you can be a good leader: be positive and calming, and set the right example in regard to health protocols.
- The person who’s made the most connections and added the most value by the end of this, is the one who will win.
