COVID-19 could increase the affordability of housing

The COVID-19 epidemic changed the tone of 2020 for many economies around the world – and for real estate investors, this could offer the possibility of buying a house, according to an expert.

Nigel Stapledon, researcher at the University of New South Wales, said it was "impossible to escape" from the fact that the coronavirus would affect the whole of Economy and could dampen the housing market.

"Yes, the government has released its stimulus package, and there may be more fiscal stimulus along the way, but there are limits to what any government can do. There will be negative effects on the economy. It will be a short, brutal shock to the economy, "he said in an article in The Conversation.

Stapledon said that in the case of the housing market, the epidemic could discourage buyers from pursuing their plans to buy a property, resulting in price moderation.

For many sellers, current market conditions could indicate weaker months to come. Stapledon said flexible sellers and those who really need to have their properties could "cushion" the potential drop in prices.

"It's important to remember that the rebound is going to happen. People will recover. People will go back to restaurants. People will go to soccer games. Things will eventually bounce back. Things will eventually return to normal – but it will there will be business losses along the way, "he said.

Read also: An economic boost to support the housing market

However, oversupply in some of the major markets like Sydney creates a vulnerable position for investors. Stapledon said the declining rental trend would likely outweigh the benefits of the Reserve Bank of Australia's rate cuts.

With weaker market conditions, he said that real estate investors could seize the opportunity to expand their portfolio.

"If prices fall, investors may be in a better position to buy, create or supplement an existing real estate portfolio, but this low rent is a real factor – it has been around for some time and should not go away any time soon. 39; here shortly, "Stapledon said.

Stapledon believes that even if 2020 will be a difficult year for the economy, it is important to see the situations with a silver lining.

Read also: Will the coronavirus affect real estate prices?

In a speech last week, RBA deputy governor Guy Debelle said that the virus epidemic is a shock to both demand and supply, but that It will end at some point.

"Once we have overcome the effect of the virus, the Australian economy will be supported by low interest rates, the fall in the exchange rate, a recovery in mining investment , sustained spending on infrastructure and an expected resumption of residential construction, "he said.

While the RBA expects conditions to rebound in the second half, Stapledon said the recovery could be postponed until next year.

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