Good News for Landlords!

It should come as no surprise that almost every property analyst out there is preaching just how much turmoil surrounds the Sydney Rental Market at the moment, and generally speaking that is undoubtedly true – HOWEVER, categorising the Sydney Rental Market as one big entity is a fallacy.

For instance, in suburbs such as Cherrybrook where approx 14% of properties are investment properties (as per the 2016 Census), with an average vacancy rate of 3.7% – 4.3%, well below the Hills Shire average of 5.3%, you can clearly see that demand is always going to trump supply. Basic economies of scale dictate that leasing a property in regions such as Cherrybrook will rarely be affected as a result of the Coronavirus pandemic, the ball is well and truly in the landlords court.

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Why Buyers are Buying during COVID-19.

Statistically speaking, if you take a moment to research past global disruptions, you will find that an increase in property prices follows soon after. In my personal view, I believe the key measures are still very much in place for the property market to bounce back strongly once the Coronavirus is contained thanks to record low interest rates’, ‘slowdown in construction’, ‘government stimulus package assistance’ and ‘new job creation’ in thriving industries that have helped contain the unemployment blow.

“I strongly believe Home Sellers should refrain from selling now if they can afford to do so, history tells us that there is no better time to sell than later!” (As the below graph illustrates)

40 Year House Price Growth

When a property market enters its corrective cycle/recession (as we are currently witnessing), inexperienced buyers tend to play the waiting game, looking to see if vendors will succumb and sell to them for a bargain price – sometimes they get lucky, most of the time they don’t. On the flip side, when the property market enters its growth phase, inexperienced buyers often overpay to secure something out of fear of missing out because it is what everyone else is doing.

“Savvy buyers pounce in market conditions such as COVID-19 – it’s the golden buying opportunity. They know they will emerge the winner on the other end, which is rarely the case in a boom.”  

Savvy sellers and buyers both know that as a seller, you will never pick the peak of the ‘boom’, and as a buyer, you will never pick the peak of the ‘bottom’. Provided you have a stable job and income, you would be crazy not to look at investing at this point in time, as opposed to waiting for consumer confidence to re-emerge amongst home-sellers once this is all over.

Granted, there are a series of variables that come into play such as each individuals circumstances, and the fact you will often trade in the same market, meaning the your key measure should always be that of ‘changeover price’.

The point I am trying to make here is, don’t read too much into the media hype, because if that is what you base your purchasing and selling decisions on, you will almost certainly miss out on the best time to transact in Real Estate.

Never lose sight of the fact that you must take a long term view when investing in property, Real Estate can be a very dangerous marketplace for those that choose to adopt a short-term mindset.

Written By: Angelo Lambropoulos (Director, Lambros Realty)

THE BIG BOOM THEORY!

For those of you who watched the PM addressing ‘Stage 3’ of the stimulus package at 4:00PM yesterday would’ve been forgiven for thinking he was gearing up for a doomsday speech in its opening stages. Scott Morrison then started to change his tune when he said; “it was likely that whole countries would collapse in the coming months, this will not be Australia. We will get Australia through this with uniquely Australian solutions” – the first lot of words that I felt exuded encouraging signs throughout the duration of this pandemic from our Prime Minister, with the PM shortly after unveiling the $130 billion jobs package for workers.

Whether you love, hate or sit on the fence with your views of our PM, credit must be given to how he and our leaders have stood up to this challenge. Scott Morrison appears to have risen above‘ the challenge, as opposed to being caught ‘within’ the challenge, which appeared to be the case in the early stages (and fair enough I might add given the circumstances). What an excellent display of resilience and character, especially after all the criticism he coped over recent months – he’s handled extreme pressure well.

As a nation we have done a magnificent job containing the virus, currently sitting at 4,364 confirmed cases and only 18 deaths, with the curve now beginning to flat-line. NSW has now escalated the situation by taking extra precautions – introducing a penalty of up-to 6 months jail or $11,000 fine for those that fail to adhere to the guidelines, personally I think this is a necessary measure to stamp out complacency and quickly suppress the contagion.

As I draw to conclusion, I would like to lastly mention the industries that are thriving as a result of the Coronavirus, helping keep us buoyant as well as providing jobs for the unemployed. (I would also like to take this opportunity to personally thank those of you working in the following industries, I know just how hard you are all working, going above and beyond for us all):

(i) Healthcare.
(ii) Fast Moving Consumer Goods.
(iii) Financial Advisory Firms.
(iv) Education
(v) Utilities
(vi) IT

I’m every bit confident that people will be itching to go out and spend more than ever after being confined at home. So, if you’re in the hospitality, tourism and/or any other industry that has been significantly impacted as a result of the Coronavirus, hang in there because you’re almost certainly going to RIDE THE BOOM once this is all over, exactly as the thriving industries I have just mentioned are experiencing now.

Don’t be surprised if this is all over well before the 6 month period we have been told to expect. I wish you the best of luck and every success on the other side of this – you deserve it!

Kind regards, Angelo Lambropoulos (Director, Lambros Realty)

How will COVID-19 (coronavirus) affect the Property Market?

Image result for angelo lambropoulosI believe it’s only a matter of time until property prices inevitably start to drop. Up until recent times, the property market appeared to be gathering healthy momentum due to easing credit conditions and interest rate cuts.

Whilst there had been talks of an additional interest rate cut at some point in the first half of this year, this months interest rate cut from the Reserve Bank was a result of fear of the developing coronavirus outbreak (don’t be surprised if there is a further rate cut to .25% tomorrow as a result of the RBA’s Emergency Meeting) – contrary to what those may perceive as a ‘positive outlook for the property market’.

The fact of the matter is, the coronavirus is negatively impacting the economy as a whole – to say that the property market is immune to such a pandemic is absurd. Even with the stimulus package the Government has released, perhaps even another fiscal stimulus to soon follow, there is only so much our Government can do with a situation of this magnitude.

For instance, look at the hit on other asset prices. Despite the fact interest rates are at record lows, assets such as equities have copped a beating. In plain English, this means that for those that have their wealth tied up in the share market, have seen their wealth significantly diminish – literally overnight. So the chances of those individuals using that capital to buy into the housing market is a non-event.

Unfortunately there are sectors of the economy where people lose their jobs, hence an increase in unemployment, hence remaining low interest rates for quite some time ahead – the coronavirus has well and truly hit our economy, some sectors just haven’t suffered (yet) – our Property Market being one prime example!

That being said, it is certainly not all doom and gloom. Time to look on the bright side. Let’s put the coronavirus to one side for a moment – we saw how fast the market gained strong momentum post-election in May 2019, it was powering along. The 2018/early 2019 price correction was almost nullified until the coronavirus outbreak spawned.

In summary, 2020 will be the year when you will likely need to buckle up and ride the property market roller-coaster.  It’s riddled with uncertainty and speculation. Throughout the course of this year and depending on your specific market place, expect to see a mixed bag of bargain buys and strong sales – the pendulum will swing in favour of those who are in a position to hold firm and don’t panic!

However, if is certainty you’re after, I firmly believe that 2021 will be the year for those looking to seek comfort – our economy will find solid ground, it always does!

Written by: Angelo Lambropoulos (Director, Lambros Realty)