Property tipped to hold up against virus strain
House prices predicted to remain stable over the medium term
The COVID-19 pandemic is unlikely to cause a significant drop in Perth house values over the medium term, according to insight from a national property investment association.
Property Investment Professionals of Australia (PIPA) said compared to other mass economic hits, the property market would likely be shielded by low interest rates, inflation, the ability to defer mortgage repayments and previously strong conditions.
“Whenever there is a global financial shock, some commentators predict huge property price falls, which ultimately don’t happen,” PIPA Chairman Peter Koulizos said.
“During the global financial crisis, prices were forecast to fall by 30 per cent, but in many locations they held their ground and even strengthened over the months and years afterwards.
“While the coronavirus situation is somewhat different, given it’s a temporary public health emergency, I believe property prices may temporarily soften by five to 10 per cent at most but rebound relatively quickly.”
Frasers Property Australia Residential General Manager Tod O’Dwyer agreed financial relief was playing a big role in keeping Australian property afloat, as well as the industry adapting quickly to the situation by introducing virtual tours, online inspections, video links and electronic sales contracts.
“It’s an encouraging sign that we are still seeing sales activity in the local market, as evidenced by the recent rebound in the number of sales across Perth for existing properties,” he said.
“The strong initial response to our new East Green community in Greenwood is a good indicator of buyer demand for well-located property.
“Given the COVID-19 environment, we were curious to see what the market response would be and we have been pleasantly surprised.
“We’ve had more than 100 expressions of interest in the past month for property in this new community, which we expect will become available for purchase in the second half of this year.
“The financial institutions have made some significant steps towards reducing the cost of borrowing, so for those people whom job security is not a consideration, the current market may represent a strong buying opportunity.
“If this competition within the lending industry stays in place for some time, it will bode well to support a steady recovery post COVID-19.”
Mr O’Dwyer predicted Perth’s market would stabilise towards the end of the year, but he said market recovery would depend on some major influences, such as the return of interstate and international immigration, population growth and international education.