No Comments

COVID-19 Vs AUS-PROPERTY-20 (Coronavirus Vs Australian Property Investment Market)

Mark Shorrock, Managing Director of Bluestone Property Management & Sales, is a second-generation agent with over 21 years of hands-on industry experience.  Please find Mark’s opinions on the effects of COVID-19 and the property market below:

  • Misinformation is spreading quicker than the COFID-19, creating what I call the Illusory Truth Effect Virus!!!
  • China sneezes, and the Australian property market catches CODID-19. Still, Brisbane should only catch a cold when key economist and property experts forecast Brisbane to be somewhat insulated from the general market downturn.
  • Brisbane’s Clearance Rate on the 15th of Feb 2020 was 64%, almost double the same time last year (38%).
  • Fewer tenants will change rental properties so that investors won’t experience usual vacancy periods = higher returns.
  • Some tenants might experience challenges paying rent, consequently creating issues for investors meeting mortgage repayments. Government stimulus packages will help but take time, so hopefully, banks follow suit.
  • Roughly 40% of our population rent, vastly more than government housing can accommodate, creating favourable demand for investment properties.
  • Low market confidence creates life-changing opportunities for investors.
  • Herd mentality will provide savvy investors with the opportunity to purchase cheaper investment properties, increasing their portfolio and creating more wealth.
  • 5 other global events have come and gone with accompanying stockmarket gyrations but no real impact on property:
    • Bird flu 2015
    • Swine flu 2009-10
    • GFC – 2008-9
    • SARS -2002-3
    • 9/11 – 2001
  • China limits funds leaving the country, which caused foreign investment to plunge 58% ($17B) in the 2017/18 fiscal year. Travel bans will undoubtedly compound this.
  • On the other side, the virus has made Chinese feel susceptible, which could trigger mass migration and a resurgence of strong demand from foreign Chinese buyers. However, China’s economy is still recovering, so the government might continue to restrict overseas investment.
  • History confirms that from crisis comes opportunity, i.e. Savvy investors will purchase more investment properties increasing their portfolio and creating more wealth.
  • Markets in general, but mainly the stock market will experience only one more major global health crisis like this before share traders are far less reactive.
  • The volatile share market – a snapshot of the past 40 years: 12 + 10% or more corrections (some 20%+), plus 5 recessions (one we had to have) with 2 quarters of negative growth! The Australian stock market is currently down 17%, which is close to January 2019 levels and not much better than its peak pre-2008 GFC.
  • Still, Sydney and Melbourne doubled in value over the last 10 – 12 years. The disparity between these two capital cities and Brisbane has never been greater in recorded history, which is one of the primary reasons economists forecasted Brisbane to lead Australia’s recovery.
  • The market in general, but mainly the stock market only has one more major global crisis like this in it before share traders ignore.
  • With information overload events like this pass quickly plus the Gov and RBA stimulus will impact late in 2020 & early 2021, so be ready for relatively good market conditions. Especially with rates at 0.25%, borrowing at 3% & rents at 5%, e.g. for a $450k investment you’ll take home another $9kpa – like a $15k pay rise!!! This is a once in a lifetime opportunity.
  •  “I have mentioned many times over the past 21 years where I can read in the newspapers or on websites, in just one day, the real estate market is going up, down and even sideways. My thought is that overall it will generally continue to increase over time as it has a history of doing.” – Mark Shorrock.
  • In closing my advice is to diagnose before prescribing like a doctor, i.e. invest the time into researching your situation, make educated, well informed, calculated and strategic decisions.

I’ll leave you with one of my favourite quotes “You can’t stop the waves, but you can learn to surf” – Jon Kabat-Zinn

BLUESTONE – PROPERTY MANAGEMENT FOR WEALTH CREATION

Bluestone Property Management & Sales is the real estate agent that savvy Investors use when renting out their rental property/properties in Brisbane Queensland (QLD). Why because Bluestone’s Property Managers maximise the rental yield and minimise the stress involved in managing their units, apartments, townhouse and houses. Additionally, Bluestones Property Management Fees (commission charges) provide excellent value for money, so if things aren’t stacking up with your current agency give the Team at Bluestone a call.

Webinar Video – THE SINGLE BIGGEST MISTAKE INVESTORS MAKE …and how to avoid it

Should I Manage My Investment Property Myself

Video 1: Why You Shouldn’t Choose Your Property Manager on Fee Structure Alone