B Invested

Buying Property in Lockdown?

The ongoing pandemic lockdowns are playing havoc with the nation’s economic confidence. Buyers are facing uncertainty about income, while sellers aren’t sure if now is the time to list or not.

The fact remains that it is always a great time to buy and there are always property deals out there if you know where to look.

What is different about lockdown 2021?

There are different factors at play than there were when the lockdowns first happened last year.

In 2020, the Government jumped in with plenty of stimulus. They announced JobKeeper, as well as incentives such as grants for building new homes or undertaking significant renovations, in a bid to keep the construction and trades industries ticking over.

The RBA propped up the economy by flushing money through in the form of quantitative easing on top of the already historically low interest rates.

Meanwhile, banks came to the party by offering mortgage deferral periods so that people could survive their periods of unemployment or business closure without defaulting on their homes and going under.

Banks also accepted JobKeeper payments as income when considering loan applications, if the applicant could prove that they were going to keep their jobs.

However, this time around, there’s no JobKeeper and the $750 payment that is available instead is not being accepted by banks as income. Banks are also reluctant to offer mortgage holidays and, if anything, appear to have tightened their lending restrictions.

Less competition?

With less people being artificially propped up, it means less people are eligible to borrow for an owner occupier or an investment property so by rights there should be less competition if you are looking for a property deal.

The only problem is that a lack of seller confidence right now means less properties on the market too, so the competition evens out somewhat.

Also, the soaring property values that came about in the wake of the last lockdown have meant that there are a lot more people out there with usable equity in their family homes. These people may not need to borrow much or save a deposit in order to get an investment property and there are certainly plenty of people looking to park their money where they can get growth and return in times of uncertainty and poor performance for other asset classes.

Should I wait until after lockdown?

This depends on your personal situation but generally speaking, no. Once lockdown lifts, we are likely to see a rebound in confidence and price results. Many of the opportunities to get a good value buy will be gone.

Recent data has shown vendors are not as confident as they were a few months back. Their asking prices and expectations are on the way down, they are less likely to go to auction and more likely to accept a good, genuine offer and be on their way, rather than risk missing out on a good sale.

All of this aside, it’s rarely ever a good idea to wait and see what happens with property. The longer you wait on the side lines, the less time you will hold the property for and the less long-term growth you will get access to.

Where are my opportunities?

Property investment is a national game. There are different property markets all over the country. As long as a place has a decent population, tight rental vacancy rate and diverse economy, the prospects for long term capital growth are good. The key is to get a property for below market value and therefore make some money on the way in, as well as boosting your rental yield in the process.

The more affordable brackets of the property market are likely to offer up the best opportunities as there will be more income uncertainty for those who would like to buy owner-occupier properties there. Because of this, there should also be healthy demand from renters.

Get a team around you

Finding a property deal can be hard to navigate at the best of times, let alone during lockdown. So, if you don’t know where to start, reach out to b Invested. You can benefit from our vast book of contacts, plus access to the very best deals that the general public don’t even get to hear about. We can help you map out your financial goals and then achieve them.