In light of the rapid global changes affecting us all on the back of COVID-19, many are considering buying stocks and shares in this depressed market, but what about purchasing property? It pays to remember that bricks and mortar are generally far more stable than shares. And with this in mind, while the majority of us sit on the sidelines waiting to see what happens, some will look for opportunities and reap the benefits of being in a buyer’s market.
History offers some valuable lessons:
- Don’t try to time when markets will hit rock bottom - they will almost always be on the upswing when we see where rock bottom was
- After every major social upheaval there is a renewed optimism and markets, whether real estate or stocks, surge as a result
- The average recession lasted 11 months, but they almost always saw interest rates skyrocket. The current period is seeing historically low interest rates
- Recessions create buyer’s markets. However, as this recession is tracking alongside a virus, it can be projected that the buyer’s market will level off with the rate of new infections
So, what can you gain as a purchaser when many are running for the hills? Whether considering buying property as an investment or your primary residence, let’s look at the chief benefits of purchasing in a recession:
- Vendors often adjust their property’s value to meet the changed market conditions
- With much competition removed from the marketplace, buyers can choose from a variety of offerings, particularly in the case of off-the-plan properties, where they can peruse the pick of the bunch
- Decreased competition also reduces the fear of missing out and relieves the pressure of a hot market with its consequent fierce competition
- In the case of off-the-plan properties where a developer has a number of properties to sell, the vendor is more motivated to stay in the market, while individuals selling their residence are more likely to withdraw from the market until things improve in their favour
- Off-the-plan property has the benefit of an automatic delayed settlement, which gives purchasers the chance to wait till the dust settles on the national economy and things regain momentum. Loans with prolonged settlement dates could also be easier to obtain in the current market
When looking to purchase, remember the fundamentals now more than ever. Seek properties that have a major point of difference or are unique in any way. Location, location, location isn’t a property catchphrase for nothing. Look for properties that are located in suburbs that have a lot of upcoming infrastructure, as they are invariably set to boom. Look at properties in popular suburbs that you may previously not have considered, but could now be within reach. Seek properties close to transport and amenities as they will be in the most demand when times improve and are easier for investors to rent out. If looking at off-the-plan, go for generous internal and external spaces, a great level of finish and a reputable developer with a good track record.
So, to buy or not to buy – the choice is yours, to purchase while the market is waning or wait until things bounce back. With the certainty of life as we know it rocked by COVID-19, it pays to remember that like all of the other crises the world has faced, the war on this virus will end. Just be aware that the market upturn will bring with it increased prices and competition.