There’s no denying it’s a strange and alarming time amid the global coronavirus pandemic. But, fortunately, life doesn’t simply stop because of a virus outbreak.
Like many out there, I’m personally in the midst of looking for a house to buy, so as you’d expect I’m proceeding with care and caution before making any sudden movements.
But, at the end of the day, we all need a place to live. So while I probably wouldn’t have chosen to be looking at purchasing my next home during an unprecedented lockdown of society, it might not actually be as bad as first thought.
I’ve spoken to some experts to get their take on the best approach for those looking to buy a property amid this ever-evolving situation.
1. Assess your own situation
While the outbreak is one matter, the economic aftershock of the pandemic is another.
Chief economist at realestate.com.au Nerida Conisbee explains that conditions can change rapidly, both positively and negatively, so we need to take it day by day.
If you find yourself working in an industry that is currently affected or will possibly be affected then you need to take a realistic look at the likelihood of continued employment.
If you feel comfortable, or as comfortable as you can be, then now could be a great time to find that dream home.
2. Plan for the worst when it comes to your finances
While it’s impossible to know exactly what the future holds you can plan for the unexpected by making sure there’s a financial buffer for you to access when times get tough.
It goes without saying that the more money set aside the better, but this isn’t always possible – especially for families with kids or those working in industries affected by the COVID-19 shutdowns, such as tourism and hospitality.
If you’re thinking of taking out a new mortgage, naturally you should do your best to make sure you’ll be able to service the loan going forward if you or someone else in the household loses an income.
But remember to keep the risks in perspective, says Conisbee. “Job losses may occur in the short-term, but companies will need to rehire once the pandemic abates and the economy comes back.”
So, if possible, try to keep a level head and stay calm.
The health crisis, however, isn’t the only thing that’s unusual, says Melbourne buyers advocate Cate Bakos – the record-low interest rates are also worth considering.
“We are not only in a historically low interest rate environment, but we are likely to receive a crisis-cut to our interest rates, thanks to our RBA’s swift action later this week.
“Whether or not the crisis-cut materialises, our current interest rate actually aids households with smaller interest repayments enabling a greater monthly surplus, and this does hold special meaning in anyone’s economic terms.
“Shelter is a fundamental human need, and as we are seeing at the coalface even this week, many owner-occupier buyers are pushing hard to secure their home in the face of the global pandemic.
“Heightened borrowing capacity as a result of the consecutive (and likely ‘crisis’ cuts) is unknown, but is anticipated to be stronger than the post-election bounce back. Every 25-basis-points cut we enjoy is a growing percentage of heightened capacity. “
3. Seek out the best advice
If you’re at all in doubt about heading into a long-term relationship with the bank and a new mortgage then bend the ear of all the knowledgable experts you can get your hands on.
The main word we’re hearing around this current situation is “unprecedented”, so it’s unlikely you’re going to get a black-and-white answer. But the more informed you can be about all likely scenarios, the better.
Bakos says that those who are feeling rattled by the headlines may well find themselves making critical mistakes if they aren’t focusing on accurate and timely sources.
4. Remember, property is for the long term
Bakos says for those who are pre-approved, confident and informed, these buying conditions we find ourselves in could represent a great opportunity.
An important thing to remember is that property, unlike other investments, is a long term purchase. Experts agree that owning the family home is a great way to ensure long-term financial security, and while markets can dip in the short term, property values will generally increase over the long term.
If you’re in doubt about your financial situation, speak to your bank first and foremost.
“Don’t panic sell,” Conisbee says. “It’s always best to buy in a downturn and sell in an upturn. Now is a really good time to review your portfolio.”
Bakos adds: “As Warren Buffet has famously been quoted, “Be greedy when others are fearful, and be fearful when others are greedy.”