How COVID-19 will impact property investors

If you’re an existing or would-be property investor, you may be wondering how the coronavirus pandemic is going to impact the real estate investment landscape.

Here are some of the likely impacts – and while some suggest caution, others may spell potential opportunity.

Fewer properties for sale, fewer buyers

With the uncertainty created by COVID-19, as well as the restrictions imposed on Victoria's real estate industry, many would-be sellers have decided to put their property campaigns on hold. This means fewer properties are being offered to the market for sale. At the same time, there are fewer buyers competing for each property, as many have decided to delay their property purchase plans.

For property investors who are ready to buy, less competition could be advantageous, but with far fewer properties to choose from, and limited property inspection opportunities, finding the right investment property could be more challenging.

Property prices likely to dip

Job security and consumer confidence help drive price growth in the property market. With both these factors impacted by COVID-19, property price falls are forecast.

Property price dips are unlikely to be uniform. Some analysts predict that falls will be greatest at the top end of the market and less dramatic in regional areas and middle ring suburbs.

But while lower property prices are unwelcome news for many, they may present a window of opportunity for property investors, particularly those in essential services, whose job security and income are more protected during this pandemic.

Australia’s property market is predicted to rebound once economic activity resumes. In the meantime, if you are ready to buy, you could pay less for an investment property than you may have just a few months ago.

Challenges for tenants and landlords

With the economy taking a major hit thanks to COVID-19, some tenants will struggle to pay their rent and some landlords may find it hard to meet the mortgage repayments on their investment.

To help mortgage holders to hang onto their properties, interest rates are being held at record lows.

The challenge of letting homes due to COVID-19, as well as the 6-month moratorium on evictions, are likely to deter some investors from entering the market.

Now could be a good time for investors to re-finance

Various factors, including COVID-19, have resulted in one of the lowest interest rate environments in Australia in living memory. As a result, many banks – including BankVic – are offering very competitive investment loan rates, both for new borrowers and those looking to re-finance to achieve lower repayments and a better interest rate.