There are some positives that will come out of today’s unplanned, emergency rate cut (the first to happen since 1997) which was rushed through by the Reserve Bank of Australia to stem the economic damage and protect ordinary Australians from the Coronavirus crisis.

The nation's top economists decided to slash the official cash rate from 0.5 per cent to 0.25 per cent and interest rates are now at their lowest point in Australia's history.

When you add both the lowest interest rates ever plus the fact that there’s now more acreage property on the market than there was at the start of March, the overall outcome is that moving onto acreage has now become even more affordable with access to the cheapest money in our history.

Plus, historically when the stock market crashes, property tends to be seen as a more secure alternative for investors and it looks like this trend is happening again.

As the stock market is ravaged by fears of Coronavirus and the Australian dollar dips to its lowest levels in many years, Mark Williams of WILLIAMS MEDIA ponders the reactions of previous disasters in this article.
"This week we have seen a flow of capital to property," said Mr Williams.
"Property has become a safe haven in the past whenever there is a stock market correction."
"We saw this in the recession of 1987, the Asia crisis of 1997 and the Global Financial Crisis in 2008."
Mr Williams said indications this week showed that people were again moving their money to property when stock markets suffer significant corrections.
"In the past 3 days we have seen significant competition with above reserve results reported for both residential and commercial properties nationally. A record residential price in excess of $13m was achieved in the Brisbane suburb of Ascot” said Mr Williams.
"We saw strong bidding results at last weekend's auctions. Tempered by the fact these auctions are the result of buyers and sellers committed to transactions weeks before the pandemic was announced. However, they continued on with the knowledge of the stockmarket’s worst losses in many years and Coronavirus impacts on business starting to take hold."
"Upcoming auction numbers for the next four weekends has already been set. The auction numbers after that will show just how strong the market is, how much capital is flowing into property and how many people decide to hold onto their real estate, potentially creating an undersupply of stock."
“It will be interesting to see where the balance point is.”

There are a number of differences this time around.

Previously interest rates were much higher and many investors moved their money into term deposits, but now the yields aren’t there, whereas property has been showing solid price growth over the past 3 quarters and the rental yields are at the point where a large percentage of investment properties are now showing returns which are positively geared. Another new first for the Australian Property market.

It’s likely that the highly anticipated price growth in the acreage market still won’t occur in the first half of this year, but, at the current affordability levels we should start to see a lot more buyer activity in the acreage market as the impacts of the Coronavirus eases, especially off the back of the increased investment within the housing sector.

Property is looking like a very appealing option for investors, especially with recent reports now showing some hopes of a speedy cycle through the Coronavirus crisis…

Only a few weeks ago, China was overwhelmed by the coronavirus epidemic that began in the central Chinese city of Wuhan, accepting donations of masks and other medical supplies from nearly 80 nations and 10 international organizations. Now, with new daily cases in China dwindling into the single digits. ~ New York Times reported

If Australians work together during this crisis we may be able to get through it faster and with less fatality than many other countries, but only time will tell.

For more insights into the property market v’s the stock market, check out the rest of Mark Williams article here…

If I can be of any assistance to you or if you’re not sure which way to move during these uncertain times, don’t hesitate to get in contact.

Regards

Greg Vincent