The environment of low interest rates will be crucial in helping to cushion the negative impact of the coronavirus epidemic on house prices, according to the Property Investment Professionals of Australia ( PIPA).
Peter Koulizos, President of PIPA, said that the recent rate cuts by the Reserve Bank of Australia were among the many financial supports available that would help to avoid any significant drop in prices in the medium term.
"Homeowners are well placed to weather any temporary downturn," he said.
Koulizos said that banks' offer to defer mortgage payments would also be crucial support for property investors who are facing financial difficulties amid the COVID-19 epidemic.
Still, Koulizos thinks that real estate prices could temporarily drop 10%, but they are ready to rebound quickly.
"Whenever there is a global financial shock, some commentators predict huge drops in real estate prices, which ultimately will not happen. There may be a slight falling prices in the short term, but real estate is a long term investment that has always demonstrated its resilience time and time again, "he said.
Read also: The activity of buyers remains strong in certain markets
However, rental markets are expected to bear the brunt of the situation, as many short-term announcements are added to the supply of homes. As a result, rents will likely tend to go down.
"Rental markets were in good condition before the pandemic, but there have been a significant number of vacation-related announcements in the market in recent weeks, which should continue for some time to come" said Koulizos.
Despite the expected drop in rent, property investors are well placed to manage their rental income, particularly with the fall in mortgage costs.
"It is much better for this to happen now with most healthy sales and rental markets before the crisis begins," he said.
A recent CoreLogic report found that the coronavirus epidemic has not yet lowered property values ??in negative territory.
During the 28 days ending April 21, prices are still 0.4% higher than a year ago. This growth, however, already reflects moderation from the 1.1% gain posted in March.
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