What happens if house prices fall?

By Helen Collier-Kogtevs | 20 Mar 2020

Expert Advice with Helen Collier-Kogtevs, 20/03/2020

My recent prediction about interest rates going down, did eventuate.

As a result, I received a question from Ashley who had the following concerns:

“If people are losing jobs and can’t work, what is going to happen to our rent prices, will there be a big decrease? I’m just concerned that eventually house prices will drop if they don’t find a fix for this virus. The reason I am concerned is I retire in five years and the house prices will affect me greatly because that is when I need to sell my investment to leave off.” Cheers Ashley

Well Ashley, I understand where you are coming from and I hope I can settle your concerns. I’ll address your question in 2 parts.

  1. What to do if the tenant doesn’t pay the rent

I am a huge advocate for having insurance, from personal insurance, to life insurance, to contents and other assets like cars etc.

Reason being is that it helps me to mitigate my risk and gives me peace of mind.

As for the concern about tenants not paying the rent on your investment property, it’s important that every investor has Landlord Insurance. This can cover you for up to 13 weeks for Loss of Rent depending on the policy.

It’s really important to make sure you check your policy as not all insurers automatically include it. In fact, when it comes to insurance, the general rule of ‘it you pay peanuts, you’ll get monkeys’ applies. Cheap doesn’t necessary equal good.

  1. What to do if house prices fall

Will house prices fall as a result of Coronavirus? Probably yes but do you need to panic... NO! If property prices fall, it will only be temporary. History has shown us that recessions and downturns last between 18 months to 2 years.

You see, this potential recession (unlike others) could happen quickly due to the speed at which the world is reacting to the virus and causing us to shut down. I believe that we have about six months of ‘crazy’ before things start to settle down. And as quickly as markets fall, they will rise.

Long term, good quality property always presents solid returns.

So Ashley, I don’t have a crystal ball but as you are planning on retiring in five years, the market should have recovered by then.

On a side note: I want to encourage everyone to have a buffer in place to give you the sleep factor you need to ride this crazy wave of uncertainty. 

Thank you for the questions Ashley, I hope I have answered them and alleviated some of your concern.

Feel free to reach out with your questions, and I’ll do my best to answer them in upcoming blogs.

Take care, stay safe, and don’t let the ‘crazy’ stop you from moving forward.

 
Happy investing!
Helen Collier-Kogtevs

Founder Real Wealth Australia | CEO eLINK Finance
Educator | Investor| Speaker | Best-selling Author

.................................................................................................

Helen Collier-KHelen Collier-Kogtevsogtevs is the Managing Director of Real Wealth Australia, a leading education and mentoring company for real estate investors.  Not only is she a highly successful property investor and an educator, but also a best-selling author, and a philanthropist.
 
Helen is particularly passionate about helping people, especially people who are keen to create wealth and make a difference in their lives, and she has been mentoring thousands of new and experienced investors in their pursuit of wealth creation through property.
 
She founded Real Wealth Australia to mentor investors create wealth and financial freedom by focusing on helping them build an investment strategy to fit their individual goals, rather than focusing on one particular investing method using her successful “10 Properties in 10 Years™” system.

Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

Top Suburbs : bligh park , willliamstown , darlington , westbrook , canterbury

SHARE