In short, yes. Of course it will. It is going to affect every part of our economy and lives over coming months. The silliness of the Great Toilet Paper Shortage goes to show that people are scared and not necessarily behaving rationally. And doesn’t the news media just love it? Can you think of any topic that is consumed so voraciously with the latest headline?
So yes, property won’t escape. So, the question really is, how? Firstly, a caveat; the current circumstances are genuinely unprecedented, so no-one can be absolutely certain. But history does give us some clues.
When uncertainty in the economy and in society occurs, the normal reaction is to put off big decisions. So, a slowdown in activity with property sales will likely occur. The lack of sellers following the 2018 slump in prices, led to steep price increases in 2019 when confidence returned. As more sellers came to the market, price growth started to slow. The current nervousness will feed into this slowing of price growth.
However, the other significant factor is the stock market. In past times of crisis, with the share market turmoil that goes with it, people with spare money (investors) look for where to place it to get safety and also some return. Thanks to consistent reductions in interest rates, there are virtually no returns from cash. The probable main beneficiaries to this are gold and property. At least this applies to Australian property anyway.
With both positive and negative influences now in play on property values, which one will win out? Our best guess is that there will be a short-term stalling of price increases, followed in the medium term by a continuation of more subdued growth. But as we noted, current circumstances are genuinely without precedent and logic may well go missing in action for a while. Nevertheless, it is a time to be genuinely grateful we live in Australia.