Our world has changed, it’s that simple.
We know most people don’t like change as it can cause anxiety and uncertainty but this virus, like everything, is just another moment in time. This graph posted by Shane Oliver really puts this world-changing event into context when shown against the last 120 years.
We get it. Some people would prefer to wait and see what happens with increasing measures being deployed to curb the virus. Uncertainty in financial markets, strain on the hospital system, worrying statistics for older folks who contract the virus, rising unemployment, recession discussion and full societal lockdown are all peak discussions right now. It’s pretty scary rhetoric and enough for some people to freeze on making any decisions.
Optimism over fear. We know from past experiences such as the fallout from September 11 and the global financial crisis that shortly after the fear, optimism and growth are always the medicine. Right now it’s extraordinary to watch the entire globe rally and make decisions to protect life. If there is one silver lining to this mess, it has to be the united efforts to find a vaccine, protect the elderly, save jobs and keep people together. Those who are hoarding food and toilet paper beyond their fair share are thankfully in the minority and are being called out as selfish humans.
Fiscal stimulus beyond anything seen in history. Governments around the globe are deploying incredible amounts of funding into the financial system to protect industries under the most threat of collapse. This will continue and even those most pessimistic around corporate greed would have to acknowledge that we need to keep people employed, provide job security, structure and keep the system alive. No one wants anyone to fail and this event will bring many of us closer and more supportive of each other’s cause – we are all interconnected and this is the world we live in.
Shares and property. The share market is a direct reflection of fear versus optimism in real time. Fear as the impact of the virus news worsens and optimism with the Government’s responses and stimulus packages. At some stage, the share market will stabilise when the majority feel it has bottomed out and company values are recognised. We’re in the middle of the storm right now so there will be more volatility to come. There’s a view that what happens in the share market takes three to six months to filter through to the slower moving property market. Right now we’re seeing the first waves of the property market changing and we estimate that 50% of the buyer pool is now just ‘waiting to see what happens’. When you lose 50% of the buyer pool literally overnight, it will have an impact. However, just like many people who are continuing to buy shares, there are plenty who are still looking to buy and sell property.
Growth is the constant. As we’ve noted above, there is one certainty in this world and that is growth. Not just financial growth but personal growth and the human condition to keep moving forward. The question for many in the property sector right now is “If you have the money and are approved to buy, would you do it?” Everyone will have different feelings about that and our advice may be reviewed as partisan but we know this for certain, quality real estate will always be a valuable commodity. This time will pass just like every crisis and peak always does. Property is a longer-term investment and in our market it’s hard for buyers to match the desired style with the desired level of accommodation, the desired street, the desired feel and the desired price. That’s why as it stands today we’re continuing to see many people in the market purchasing what is the right home and investment for them.
Interest rates will be low for a lifetime. It is completely plausible that given this latest world event and global debt levels that interest rates may remain historically low for many people’s lifetimes. We are at the precipice and every highly regarding financial analysts are of the view that interest rates will be locked at the current levels for the foreseeable future. Prior to the virus RBA boss Governor Lowe had already suggested a prolonged period of five years of low rates but now this could spin out to more than a decade. Rates are low for economic reasons so we won’t sugar coat that fact but by the same measure every home-owner has a real chance to pay off debt faster and get their personal balance sheet into a very strong position.
We crack on. American billionaire businessman and lawyer Herb Keller said, “We’ve got a strategic plan. It’s called doing things”. Right now there are two clear paths. We can sit idly and let fear overtake us or we can crack on and keep moving. We’re very confident that the latter wins every time and in this unprecedented global environment it is absolutely the best thing we can all be doing. There is always opportunity, there is always a way to help, improve and adjust in a positive manner. That’s what we’re doing and will continue to do.
