While values are expected to be cushioned by a slimmer selling market, it doesn’t soften how the current health crisis is impacting households under every type of roof – including home buyers, investors and tenants, with each entity’s financial situation as a result of the virus having a trickle effect.
As Melinda Jennison, property investment advisor and managing director of Streamline Property Buyers, says, “We’re all navigating [this time] as it’s something that hasn’t happened for over 100 years, so it’s new to all of us.”
“The biggest thing that we are seeing is that the consumer sentiment has really taken a dive and obviously that certainly softens the demand or the real time demand for property,” she shares.
For the latest YIP Talk podcast, Jennison sits down with YIP Talk host Sarah Megginson to discuss how the industry has been navigating these uncertain times, the extent to which government support packages are remedying the most affected, and whether now is the right time to purchase a property.
“We have seen a real shift in sentiment and a lot of buyers particularly investment property buyers are taking on a wait and see approach,” she says of the current circumstances, adding that most of her clients are cautious with purchasing property now mainly because of the short-term uncertainties.
However, in spotlighting the need for investors to strategize using “quantifiable risk”, Jennison proposes that now could present “an opportunistic time” to be looking at preparing yourself to purchase an investment property – “as long as you can quantify the risk,” she says.
“Being able to negotiate on a property without the competition that we’ve had recently is a much more powerful position for a buyer to be in, and therefore, it is possible that you can secure these properties at a price that you might not be able to secure them for just four to six weeks ago,” Jennison explains in the podcast.
She adds, while it’s difficult for investors to decide when will be the “right time”, entering the market when everyone else is will present a more competitive environment.
As the state and territory governments issue support packages for both landlords and tenants, which include land tax waivers and rental rebates, Jennison says it also comes down to tenants and landlords “working together”.
She advises investors to implement their own risk mitigation strategies during this time, which includes getting in touch with their lender to find out what loan support options are available if they should be needed.
For investors who had purchased an investment property a moment before the disruption of the pandemic took hold, they may be faced with the conundrum of whether to fill the vacant rental at a lower rate or wait for the market to re-instate more of its norm.
However, Jennison notes that while choosing to lower the rent by $50, for instance, “is going to be a bit of risk to take” compared to the rental rate you could sweep in before the pandemic – having the property vacant instead might mean “another $500 that you’re missing out on [per week]”.
To learn more about how to best approach the property market and prepare a plan to mitigate your risk during COVID-19, tune into the latest YIP talk podcast here.
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