It has a been a summer for many that we are happy to have behind us and move on to happier times.
That being said, there is the threat of the Coronavirus pandemic that could have further implications for all of us. The stock market has taken a big hit due to the uncertainty created by the virus, and it will be interesting to see if there are serious impacts caused by breakages in the supply chain for items that we import, especially items that we import from China. Many of our daily consumable items come from Asia and any impact the virus has over there in the manufacturing and transportation of goods may well be felt by all Australians.
The Treasurer Josh Frydenburg has stated that he expects the Coronavirus will have a serious impact on the Australian economy due to our heavy reliance on Chinese investment, tourism and students. A PriceWaterhouseCooper report states that the economy could face a $2.3 billion downturn due to fewer Chinese tourists and students not coming to Australia. Additionally, China is our biggest export market, and with a downturn in the Chinese economy this will affect the sale of goods and services from Australia.
A potential downturn in the economy will have a flow on effect to the national property market.
- There is potential for less wage growth as the economy slows, which will reduce buyer’s capacity to borrow.
- There will be less Chinese students looking for accommodation which will impact investors
- There may be less Chinese investment in the property market which will impact on prices. Depending on whether you are a buyer or seller this could be good or bad news.
Today’s interest rate cut by the Reserve Bank is a lever they can pull to try and boost the economy which will benefit buyers. Of course, this is not great news for the retirees in the community who are dealing with poor return on their investments due to the record low interest rates.
At this stage the Australian property market is in great shape compared to 2019. The Corelogic February 2020 Home Value Index Results confirmed that nationally, housing values increased by 1.1%, with values across five of Australia’s eight capital cities reaching a record high. The median price for a property in Canberra is now $631,862, an increase of 0.8% for the month.
Any dropping of the property or share market can be a great time for investors to buy when prices are low. When to make the purchase can be difficult, trying to anticipate the bottom of the fall, though there is some comfort that the property and share market has always increased in the long term.