Has the time come to invest in Real Estate market?
Team Veye | 10-Aug-2020
Of all the asset classes, real estate used to be considered one of the safest. That was a common point of view before the pandemic. Does it hold good even now?
With property prices continuing to fall ever since the virus broke out, has the right time come to take a plunge. Though many experts are warning of further weakness ahead. They are predicting further fall across rest of the year due to ongoing weak economic conditions.
At the start of the second half of FY20, prior to the emergence of the effects of COVID-19, the Australian property market had shown strong signs of recovery, including improvements in national residential listings led by Melbourne and Sydney.
As COVID-19 restrictions eased in June, the real estate market responded positively, with new residential listings up considerably. Despite the effects of COVID-19, the market saw strong levels of buyer enquiry in July underpinned by low-interest rates and healthy bank liquidity.
The latest restrictions in Melbourne, which ban physical property inspections, are likely to cause significant short-term weakness. However, the property market has shown great resilience, bouncing back from the lows of COVID-19.
The main thing to ponder is whether the pandemic strikes a short but sharp blow or a long drawn out war. But buying to hold onto the property for a long period of time is always best, especially when the market is uncertain.
The economy is likely to rebound in the 4th quarter of this year or early next year at which time we are likely to be experiencing a perfect storm for a property. The International Monetary Fund has forecast that the Australian economy will contract by 6.7 percent in 2020 but expects the domestic economy to rebound by 6.1 percent in 2021.
Major Banks and lenders are already offering extensions on repayment holidays. It is, therefore, felt that for first home buyers, there's never been a better time to be in the market. Improved affordability means buying now could offer big rewards in the future.
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