Sun 24th May , 2020

Covid-19 and the direction of property market


The property market moves in cycles: there are significant upturns and downturns over the course of a few years, however, our data show that property values have appreciated consistently in the long-run in every state/territory in Australia.

In addition, property investment is a long-run game due to significant transaction costs when the property is bought and sold. Therefore, the ability to keep the property, generate equity and acquire more high growth properties down the track is essential to build wealth.

Looking backward over the last several decades, property values have appreciated in the range of 6-7%/per year across all capital cities. Obviously, there are markets within market due to the significant differences in the supply of and demand for properties, which determine capital growth, yield and liquidity at the suburb level.

The covid-19 virus has certainly created a negative effects on the sentiment of customers, as well as the ability to pay. The market is expected to go down in the coming months when the deferral of mortgage repayments end. However, it is not clear about the magnitude of the downturn because the government may consider to implement stimulus packages to enable home buyers to enter the market.