Don't Panic

Just like any product, property is a commodity valued by the
market it creates. As supply of housing tightens, inevitably resultant
excessive demand pushes up values and / or rents. The converse is also true,
too much supply causes soft demand and rents or values fall.

Sometimes, market sentiment predicated upon irrational
reaction to certain events or policy settings can also impact property values.
Governments learned this lesson when announcing in advance that stamp duties
were to be cut from a certain date or a new buyer grant was to be introduced
down-the-track and briefly wondered why sales activity stopped dead. When the
date arrived, demand would spike, pushing up prices effectively wiping away any
buyer savings anyway.

Up until the middle of last week, collective community
thought was that Perth’s property recovery was underway. Sales volumes had
begun to rise, competition for quality family homes was strong and prices were
rising. Rents, too, were beginning to recover from four-year lows as population
and jobs growth improved demand in a market beginning to show signs of
shortening supply.

By last weekend, media was full of the global spread of
COVID-19. European countries closed borders, thousands had contracted and many
had died from the disease, share markets crashed, self-isolation laws were put
in place and supermarket shelves were stripped bare.

It’s no surprise then that both buyers and sellers are
re-thinking their property plans at the start of this week.

Some buyers are withdrawing their offers, sellers are
deciding against selling now and rent arrears in tenancies are beginning to
rise. Everyone, it seems, is drawing in breath and waiting to see what’s next.

However, should we really be putting our lives on hold in
such dramatic fashion? We still have very few members of the community
infected, most people I am meeting are sensibly “social distancing” and the fundamentals of our civil
society and economy remain firmly intact.

Once the worst of the COVID-19 pandemic is over, it is
widely anticipated that life as we know it will return to normal relatively
quickly and we’ll be wondering what all the fuss was about.

The current situation ought not give rise to irrational
decisions around property. Tenants should still pay rent, buyers should continue
with their plans and sellers ought to take advantage of the improving 2020
market. Otherwise, group mentality will see a rush to buy once the crisis
passes (perhaps like the great loo-paper rush of March 2020) pushing up prices
in an unsustainable way.

So, when it comes to property, play the long game and
collectively the property market will remain stable.