It’s no secret that the global pandemic of COVID-19 has changed the world as we know it. Whilst there are concerns around the duration of effect the virus may have, it is extremely difficult to plan too far in advance at present as we brace for a situation most of us have never experienced in our lifetimes.
Several industries have suffered extensive downturns as the world goes into survival mode. Whilst the Australian property market is also tipped to feel the impact, it has not been as effected as some of our other national industries. There is still active buyer and seller activity in various states, in particular Western Australia, and with people spending more time online than ever before, it still remains a busy property market.
The Perth Market At Present
The latest figures from PerthNow have just revealed that Perth property prices enjoyed their best quarter in roughly six years. Perth’s median house value now sits at $445,614 (as of 31st March 2020) with dwelling values up 0.5% in March and 0.9% for the quarter.
The market has consistently been improving since October 2018 thanks to low interest rates, low unemployment rates and increasing consumer confidence. It’s also never been cheaper or easier to secure finance, so the Perth market still has some encouraging signs for the future.
The Coronavirus Will Have An Impact
Make no mistake, the Coronavirus will stem Perth’s growth in the property market and a downturn is inevitable. However, this now presents an opportunity for buyers and investors to focus on long-term planning to secure their future property goals for when the eventual market recovery occurs – and it will occur. As far as when this will happen is unclear, so for the moment, off-the-plan purchases are an ideal opportunity for buyers or investors.
“The housing market won’t be immune to a drop in sentiment and weaker economy, however the extent of the impact on dwelling values remains highly uncertain. Capital growth trends will be contingent on how long it takes to contain the virus, and whether additional constraints on business or personal activity are introduced.” – Damian Collins (REIWA President).
And The Good News Is…
Whilst some property experts have predicted the COVID-19 pandemic is still as long as 18 months away from an end-point, the good news is Paradiso is due for completion in 2021!
Despite global uncertainty around the duration of the virus, developers have still been reporting healthy levels of sales enquiries and interest in off-the-plan sales due to the lower risk factor in acquiring this style of property investment.
The Benefits Of Buying Off The Plan
As explored in our previous blog, there are a number of advantages to securing an off-the-plan purchase ranging from reduced risk, to more flexibility to manage your finances during times of uncertainty. We’ve reinforced some of the key advantages below which are relevant to the ongoing challenges of the current property market.
Less financial risk
By settling on a purchase price before the completion of your apartment, you will only be required to put down an initial deposit before finalising your finances 3 months out from completion. This means you pay nothing between deposit payment and settlement on your apartment.
This not only helps to secure your future property with minimal cash outlay, it also helps to free up your finances and encourages potential capital growth, helping to reduce your risk throughout the construction phases. Even though we are unsure of the extent the Coronavirus will have on the property market, off-the-plan purchases present a much lower risk transaction compared to purchasing an established property.
Future certainty and clarity
One of the most common concerns around off-the-plan purchases is the risk of the project becoming delayed or stalled due to the development requiring a certain number of sales before construction begins. Thankfully construction at Paradiso is fully under way and on schedule for completion in 2021, meaning you don’t have to worry about the uncertainty of unknown completion dates.
Government incentives and tax support
There are an array of government incentives helping buyers and investors move into off-the-plan apartments, making the whole process more affordable and easier than ever before. For example the First Home Owners Grant provides first home buyers with a one-off $10,000 payment, whilst investors can enjoy great depreciation benefits on brand-new apartments through tax deductions on fixtures and fittings, which is great for your cash-flow position.
Capital growth opportunities
Off-the-plan apartments also provide the potential for capital growth due to market fluctuations after you have signed the contract. This means your apartment may be worth more than you paid for it by the time it is completed. With the current housing conditions being as affordable as they’ve been for a number of years, now is a great time to either add to your portfolio, or to jump onto the property ladder for the first time in order to beat the curve.
Why You Should Be Thinking Long-Term
The property industry is currently in a state of flux and it’s difficult not to get caught up in the daily news and ongoing developments that are changing the trajectory of the market.
Even though it is impossible to predict the future, we are confident that the world will eventually recover from the COVID-19 pandemic and return to some form of normality. The landscape will most definitely have changed and things will be different, however this will be the starting point to an eventual market recovery. Instead of knee jerk reactions in a highly dynamic market, focus on setting yourself up ahead of the growth curve with future planning that safeguards your risk.
A good example of this was the Global Financial Crisis in 2007 – the most severe financial crisis the world has seen since the Great Depression in 1930. As industries fell and the global economy crumbled, it was the opportunists who found themselves ahead of the curve with longer-term investments like property helping to find the silver lining. In times of crisis, in particular market corrections, the world tends to move towards bricks and mortar as a safe investment for prosperity.
This can be seen in the CoreLogic figure. When significant, negative economic shocks occur, the effect on the housing market varies. Read the full CoreLogic report here.
The Australian government has been focused on introducing new schemes and support packages to help the nation through this difficult time of uncertainty. Just this week, the government has introduced the Australian Economic Stimulus Package totalling $213.6bn in direct, on-budget spending from the Federal government, a further $12.8bn from each state, following by an additional $105bn in lending from the Reserve Bank Of Australia. Unprecedented levels of support given the ongoing crisis.
The Government’s economic response specifically targets the following areas:
Looking at Western Australia specifically, a $607m stimulus package was introduced to freeze household fees and charges until July 2021 (as a minimum) as well as a $1bn package help small businesses and households with further assistance including energy bills and health expenses.
Further government incentives such as the Job Keeper Allowance will also help to minimise unemployment levels, which in turn has a knock on effect to the property market.
It is these very schemes and incentives which are helping Australians navigate the uncharted waters.
Now Is A Great Time To Invest
If you’re thinking about investing in property amidst the ongoing market conditions, choosing to buy off-the-plan is a great way to acquire your dream property without the hassle and risk of established properties. Construction is under way and apartments are selling at Paradiso, so why not enquire today to see how we can help you secure your future apartment in Como’s premier riverside location.