An emergency. Then crisis. Now a pandemic?
Falling confidence. Market correction. Talk of recession. Social distancing. Cancelled events. Closed borders. The list goes on and on.
No good news anywhere.
Panic!
There is little doubt that it is serious.
And I don’t want to make light of the coronavirus (COVID-19) but I am of the opinion – and it is just my opinion after all – that its impact will ultimately be temporary.
In the words of the infamous allegory; this too will pass.
The start of 2020 was always going to be bumpy. The economy was slowing down in earnest during the second half of 2019. And the recent two black swan events – local bushfires and now the coronavirus – have added further turbulence.
However, with RBA action, government incentives and now some meaningful endeavours – and with a little bit of self-control on our part too – hopefully, the second half of calendar 2020 should be better, economically, than the first half and 2021 should be stronger than 2020.
For mine it is always the property fundamentals that really matter.
The long-term view outsmarts short-term thinking.
Things that really matter when it comes to the housing market include demographics, work trends, settlement patterns, finance, taxation, regulations, compliance, affordability, and importantly supply and demand.
None of these fundamentals are likely to be substantially altered by the current virus and the ensuing fear; subsequent machinations and changing confidence.
And again, in my opinion, residential property is unlikely to be affected anywhere near as much as other property classes. People will always need somewhere to live, and homes are the true “safe haven” in the current environment.
This sentiment may also loiter after this emergency passes. It may even strengthen the longer the virus remains unrestrained.
It is always challenging to invest when the rest of the market is running around beheaded and worrying about the end of the world.
People much smarter and wealthier than me say that it is precisely these conditions that present the best opportunities.
So, if you have a strategy, you know what you want to do and why. In short if you have a long-term plan, then now is an opportune time to do something about it.
I am sometimes employed to help identify future housing development sites. These appointments always start with me asking the client to define what they are after.
It is surprising that many don’t have a clearly defined answer.
If you too would struggle with a reply, then maybe answering these ten questions is a good place to start.
The italic replies below illustrate the type of reply which would help me and should help you too.
- Geographic– Want to stay in Brisbane region, preferably within 10m to 25km radius of the GPO
- Buyer types– Downsizes and pre-retirees as owner residents, sharing as tenants
- Price points– Middle of the bell curve – $350k to $600k
- Product– Three bed minimum, two+ 1/2 bathrooms, two cars
- Tenure– Freehold wherever possible or low body corporate fees
- Project size– Site values up to $1.5m, gross realisation under $5m, 10 to 25 dwellings typically
- Timing– In and out within 12 to 18 months
- Status– Accept that exiting DAs will need to be changed
- Budget– 2% marketing + sliding sales commission starting with 5% sales and sliding to 3%
- Brand – No waste, value for money, a third of our sales come from referrals.
So, again without making light of the coronavirus and its impact, if you have a plan, now is an opportune time to do what the crowd isn’t; and in this case, buy your next development site or your next home or property investment.
Of course, caveat emptor applies.