Historical economic recoveries have shown a steep rise in property prices in Australia. The property market has always been the first sector experiencing rising prices after an economic crisis, says Darren Piper from Universal Buyers Agents. “If we learned one thing from historical economic downturns, it is the quick recovery of the real estate market.” Residents from Australia know very well how important a nice home is. After an economic crisis, people turn to basic needs first. Which explains the frontrunner role of the real estate market during economic recovery periods.
He further states, “During the global financial crisis Australia was a worldwide exception to avoid a recession, but nevertheless the real estate market experienced fast-rising prices between 2008 and 2010 during the aftermath of the global crisis.”
Upper-class areas are expected to see the first and sharpest rise in property prices. These areas are commonly perceived as the most valuable and thus safest investments. The shrewd investors will be fast to target cheaper locations that have a lot of growth potential. If you want to secure a bargain before the crowd becomes interesting again in this type of real estate, you will have to be very quick, which means taking more risks as well.
One of the upsides of the coronavirus is the predictability of the epidemic. When you take action before the whole nation starts to look for opportunities is the best moment. But above all else make your own analysis and decisions without waiting for the crowd, to secure the best investment opportunities.
Governments around the world including the Australian government will implement emergency and startup packages to recover the trust of its people in the economy. Further boosting the confidence of Australian residents and investors to invest again in the real estate market, driving the prices up. Regional capitals have always seen sharp increasing prices before more rural areas start to become more expensive.
“Of course, no crisis is exactly the same but we learned from the global financial crisis and international coordination has never been so smooth before,” said Darren Piper from Universal Buyers Agents. “The predictability, international coordination and time schedule of the Coronavirus will boost investor confidence once the country opens up again,” he says. 29 years ago Australia experienced its last recession. When the recession ended in 1993 all the residential areas in regional capitals grew in value along with residential areas outside of the regional capitals.
No one can exactly predict how sharp the increase will be but there are several factors to have an effect on it.
The deeper the real estate market plunges, the steeper the rise will be when it bounces back. How long will it take before the country opens up again? How much stimulus the government will inject to instill investor confidence again. If many people will lose their job it might take longer before they feel confident again to invest.
No matter how sharp the price increase will be, that we will experience a price hike is almost certain. Just the sharpness and exact timing are not known yet.