No one knows what’s going to happen.
For the naysayers, it’s very easy to say we’ve never experienced this before, and everyone is underestimating the consequences. They said it during Y2K, the Asian Crisis, the GFC and more recently the Credit Crunch.
For those in the industry, it’s easy for them to portray being confident and downplaying the potential chaos as they need to protect their businesses and keep transactions and revenue moving. They may well be property owners themselves.
Just like in business, some property owners and investors are going to thrive, some are going to suffer really tough times and others are going to make a fortune as the market recovers.
Part of your personal result is going to come down to the property that you bought, the price range, the location and its condition. There may be nothing you can do with that historical purchase and depending on what you’ve bought, you may or may not be affected. If you’re susceptible to a one-industry town or a single demographic buyer or tenant, it will come down to luck.
The next variable is going to be your personal situation and how well you are prepared. Do you still have a job or a business and money coming in the door? Have you got a cash buffer in place for your living expenses and for holding on to your property, especially if it’s negatively geared? Did you take out insurance on your property? Did you use a professional property manger to find your tenants and manage it on an ongoing basis?
The rest is going to be down to you and how you play the cards that you have been dealt. What can you do to increase your income and reduce your expenses? Have you spoken to your lender about dropping your interest rate, move back to interest-only or take a repayment holiday? Does it matter what the vacancy rate is in the area if you’ve got the right property, presented well and advertised by the best property manager in the area? Most people don’t lose on property unless they are forced to sell. Do whatever you can not to be a forced seller.
Many potential property buyers complained about the rapidly increasing prices in 2016 – 2018 and couldn’t get into the market. Then they all talked about their expertise in picking the bottom in 2018 – 2019, yet all missed it because Labor got pipped at the post in the final hours of the election. They started complaining about rapidly increasing prices in the latter part of 2019 and early 2020. They were missing out yet again as prices often jumped 5 – 10% over expectations at auction.
And then the world changed literally overnight in mid-March.
There could be a small window. There could be a large window. But there’s definitely going to be a window where many people have the opportunity to enter a market that they never could before.
Many will miss it again though in their search for the bottom.
Many of the industry professionals have acknowledged that things will change, and many prices will fall. However, most believe it will be short-lived and won’t be as dire as many are expecting, especially the known economists who have been predicting the 40% fall in house prices across the board for the last 20 years and are still waiting to be right.
Whatever you believe, part of your future you will not be able to control and part you will. Educating yourself, hiring professionals and limiting your exposure to the media, especially from self-labelled experts will assist you to survive and then thrive in this changing environment. Concentrate on what you can manage, stay home and stay safe.