Low rates poised to buoy prices

By Gerv Tacadena | 29 Apr 2020

The low interest-rate environment will be crucial in helping cushion the negative impact of the coronavirus outbreak on house prices, according to the Property Investment Professionals of Australia (PIPA).

Peter Koulizos, chairperson of PIPA, said the recent rate cuts by the Reserve Bank of Australia are amongst the many financial supports available that would help prevent any significant price declines in the medium term.

"Property owners are well-placed to ride out any temporary downturn," he said.

Koulizos said the banks' offer to defer mortgage payments would also be a crucial support for property investors who are faced with financial difficulties amid the COVID-19 outbreak.

Still, Koulizos believes property prices might temporarily decline by as much as 10%, but they are poised to rebound quickly.

"Whenever there is a global financial shock, some commentators predict huge property price falls, which ultimately don't happen. There may be a slight downturn in prices over the short term, but real estate is a long-term investment that has historically shown resilience time and time again," he said.

Also read: Buyer Activity Still Strong In Some Markets

However, rental markets are expected to bear the brunt of the situation, as many short-term listings are added to the supply of houses. As a result, rents will likely trend lower.

"Rental markets were in good shape prior to the pandemic, but there has been a significant number of holiday-related listings come on to the market over recent weeks, which is likely to continue for some time yet," Koulizos said.

Despite the projected decline in rent, property investors are in a good position to manage their rental income, especially with the lower mortgage costs.

"It is far better for this to happen now with most sales and rental markets in healthy shape before the crisis began," he said.

A recent report from CoreLogic found that the coronavirus outbreak has yet to pull property values down in the negative territory.

Over the 28 days ending on 21 April, prices are still 0.4% higher than a year ago. This growth, however, already reflects a moderation from the 1.1% gain in March.

Top Suburbs : revesby hts , wiley park , coburg north , coolbellup , willoughby east


Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local mortgage broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here