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.
A Changing Dynamic
During these unprecedented times there has been a shift in what we define as the new normal, which have created other forces in the property sector that could influence decision making. Many of us have suddenly realized how well we work from home and we enjoy having our performance levels high all the while not having to commute to work. This shift in working styles will ultimately have an influence on the property market.
Coronavirus to some has brought forward the reality of how we work and balance our lifestyles to a more productive yet synchronizing way of life. We could possibly see an increase in demand for properties that have provisions for home offices or located further away from the city. This certainly doesn’t mean this could be a permanent change, but it’s certainly making people re-evaluate their lifestyle choices.
Timing Your Purchase
A key learning point during investment in the time of a crises, be it a pandemic or a recession, is to think of the long-term vision you have for your investment portfolio. Don’t make the mistake of trying to time the market to see if property prices will go down but instead focus on properties that are well placed to grow in value over a longer period of time, irrespective of short term shocks.
It’s important to note that there are likely going to be highs and lows along the way, but you may have just found a fantastic opportunity that will serve you a lifetime of financial success and wealth creation.
This Too Shall Pass
All the evidence points towards the economy having a slowdown as the pandemic peaks and an economic peak when the pandemic slows down. Many countries are starting to shift back to their regular operations. This is not to say that the pandemic is not a serious health threat. But eventually when we move past this, it is likely that the property market will make a strong recovery. Remember, investing in property is a long-term decision that will take you through for years to come.
Your Position as A Property Investor
Consider your options based on your financial arrangements. Are you in a good position to invest now, or would you rather wait until the dust settles? But don’t slow down because that’s what everybody else is doing – that’s one big fatal investment mistake.
If you’re in a comfortable financial position where you’ve got good job security or extra income set aside, then you’ll want to know that this is a great time to hop on the real estate ladder.
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