It’s inescapable. It impacts all of us. It won’t go away. It’s turning our entire world and “way of life” upside down. And it’s spreading faster than wildfire, claiming a growing number of victims.
I’m not talking about disease. Rather, I’m referring to the pandemic of panic gripping millions of people across the planet right now, and driven predominantly by mainstream media outlets.
Fear and scaremongering from the press is nothing new to property investors. We’ve seen and heard it all before. Just not to this degree perhaps.
But since housing has become an increasingly desirable commodity for those seeking to build a retirement nest egg, there’s rarely a week goes by where a story doesn’t surface suggesting that property markets will “collapse” or a bubble will “burst”.
If anything, I think a lot of us have become somewhat “numb” to it all. Particularly those who’ve been in the property game for the long haul and not only survived to tell the tale, but also grown a thriving, profitable and resilient investment portfolio.
That’s not to say we don’t take this stuff seriously. Of course we do. Hence, we have financial buffers and risk mitigation plans in place, to “weather” such storms as the current Coronavirus lockdown.
We also recognise that times of uncertainty, where many people will become immobilised by fear, can create some of the greatest opportunities for those who plan and prepare ahead.
Destruction leads to a very rough road…
But it also breeds creation. Real estate is by far the most resilient of all asset classes. As one of the few essential commodities required for our base survival, housing will always bounce back. As will economies.
Consider all of the times throughout human history when disaster has befallen us – physically and/or financially speaking. All the way back to the toppling of ancient empires and civilisations.
And yet, in spite of our turbulent and oftentimes destructive past experiences, we’re still here. Prevailing. Generations on, long after our ancestors have fallen, we continue to rebuild and recreate ourselves, as necessity dictates.
This current situation is no different.
Will things change as a result of the world going into indefinite lockdown? You betcha! Can you or I determine what’s going to come of all this? Absolutely not.
What we can do however, is not lose our minds – based on media stories or what family and friends are saying, doing or believing all over our social newsfeeds – but instead USE our minds…to maintain a healthy perspective on the problem at hand, thereby determining the best path for us personally, moving forward.
Pause for a moment, turn the TV off, and ask yourself – who, how, what and where do I want to be when I come out of isolation? And be prepared to listen to your own wise counsel. Because you know yourself better than anyone!
The Lucky Country indeed
Talking about perspectives, let’s take a moment to consider the major Australian property markets and predictions around how they might fare over the coming months and years.
As always, “expert forecasts” depend largely on who you listen to, and it’s important to note as investors we’re not “buying the markets”, but carefully researched and selected real estate that has a strong history of stable growth, regardless of extenuating circumstances or X-factors.
On the one hand, you have the likes of (somewhat controversial) US commentator and demographer Harry Dent suggesting we’ll see a 30 per cent to 50 per cent decline overall in our nation’s home prices.
“The biggest challenge for Australia is going to be the real estate bubble burst, and the impact on household net worth, and the impact on the banks, who have 75 per cent exposure to this,” he told Switzer.
Mind you, this rhetoric isn’t unusual for Dent, who’s made similar predictions about our housing markets in the past, and seemingly failed to get any of them right.
Meanwhile, AMP Capital chief economist Shane Oliver predicted the unemployment spike caused by coronavirus could see property prices in Melbourne and Sydney fall by as much as 20 per cent.
There are so many numbers being bandied around right now, it’s enough to make your head spin. Who do you believe? What predictions will prove correct? How long will this continue?
You may as well be asking, how long is a piece of string? Because the truth is, no one can really say in earnest. These are unprecedented times and as such, we haven’t really got any standards by which to measure or judge them accurately.
What we do know, is that compared to many other developed nations who’ve been dramatically impacted by current events, Australia is indeed looking more and more like the Lucky Country right about now.
We are weathering this storm better than most. And the world is taking notice. We boast some of the most liveable cities and vast tracts of land, with one of the smallest populations (relatively speaking).
If we were seen as a desirable destination for migration before this virus shook the world to its core, that reputation is only set to become stronger in light of recent happenings.
I, for one, believe that investors who were prepared for this storm…because they understand that property is a long term prospect and not a short term money spinner, will recognise the approaching opportunity to make their portfolios even more profitable.
Yes…house prices will fall in the short term. But with interest rates at record lows and less competition in the markets…well, you do the math!
One thing I would agree with Dent on, is that the impending downturn will likely expose any economic weaknesses that perhaps need a restructuring, in order to work more effectively.
Likewise we can all use this this time to review our portfolio’s to see what we can do to put ourselves in the best position for the next twelve month, and through the next five years.