Unlike the headlines announcing a dramatic fall in house prices due to COVID-19, the real estate market will likely experience a substantial recovery, according to the latest study from the Property Investment Professionals of Australia (PIPA).
The study analyzed the four recent economic downturns in Australia and found that annual median prices in capital cities increased significantly five years after each recession. Peter Koulizos, President of PIPA, said that analysis of previous recessions indicates the resilience of the real estate market.
"In fact, looking back over the past nearly 50 years, house prices were higher five years after a recession or a recession each time," he said.
One of the most significant recoveries to take place was in Sydney, where prices climbed 100% five years after the 1973-1975 recession. Sydney also led the recovery from the 2008-2009 global financial crisis. In 2014, real estate prices in the city increased by 39.7%.
Read also: The good investor mentality for COVID-19
It is essential, however, to note that local economic factors in capitals play an important role in how their property markets can rebound, said Koulizos.
The table below shows the price increases recorded in each capital five years after the last four economic slowdowns:
Is there any reason to worry after COVID-19?
Koulizos said there was no reason to panic, given that the housing market has always been resilient amid economic shocks.
"Research shows that talk of impending" loss of property "has never occurred in recent history – and these recessions or slowdowns have lasted for several years rather than a few months," he said. -he says.
Although prices are still likely to fall, Koulizos said that a possible downturn in the housing market would be neither sustained nor prolonged.
"An interesting point to this is that in 2011, each capital recorded a drop in its house price index, which was simply when the stimulus money from the GFC was exhausted", did he declare. "This may well become a statistical reality this time too, but it is important to recognize that in a year or two from this period, the house price index again showed solid growth."
In a recent interview with Your Investment Property, Simon Pressley, Managing Director of Propertyology, said that the market remains favorable given low mortgage rates, support for first-time buyers and the policy of "reasonable" credit.
"Savvy real estate investors understand that three to six months of disruption is minor in the overall property system. If anything, it creates a little window of opportunity. After all, they are investing in the product essential housing, "he said.
Main suburbs:
tank
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Torrensville
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alexandra hills
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mortdale
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crossing ropes
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