Property Investing During Coronavirus
If you’re looking to invest in property in the next few months, you’re probably wondering where your plans stand amidst this global pandemic. So, what factors should we be considering during this period?
Reflecting on The Past
History has undoubtedly shown us that the property market has been fairly robust against negative economic movements. This can be explained by the nature of this asset class being low in volatility and is mostly insulated from short term shocks. The impact of economic turbulence on annual growth rates of housing prices has been contained for the most part, and the recovery from downturns has been rather rapid. Based on previous real estate cycles, we can see that overall economic recessions are not necessarily key predictors of declines in housing values.
The hope, therefore, is that when social distance restrictions are lifted, the economy and the property market will stabilise and further thrive as one of the best investment asset classes.
Fluctuating Property Prices
Though real estate proves to be an excellent investment asset class, it is impossible to predict the overall impact of Covid-19 in the property markets, both locally and internationally. There are various factors that could influence price growth or price drops over a short term period. However, be careful when looking at properties with significant discounts. It’s not uncommon for the quality to be compromised when a property is being discounted which can be disastrous for your investment returns.
It is worth to consider that astute investors sometimes turn to property during unprecedented times as a way to secure emergency income for the future where a pandemic may arise again. If Covid-19 has taught us anything, it’s that we should always have a contingency plan to secure our financial position for a rainy day. This can increase demand, which in turn will result in an increase of property prices.