Well our fabulous though dangerous year is continuing on as it started. On top of the natural disasters, we experienced the sharpest share market dip in history last week.
Economists sited the spread of the coronavirus as one of the causes of the dip, although some also noted investors were becoming skittish as the share market had reached historical peaks in February 2020.
In Australia, this week (2-8 March 2020) we've already moved on from that news – we bounce back quickly here particularly as the GFC taught us all that what goes down will usually go back up, though it's anyone's guess as to when a share market recovery will take hold.
The biggest issue we're dealing with this week is the strange and unprecedented run on grocery market staples. You would think there's a pandemic coming or something.
Interestingly, just like the property market, the grocery frenzy is very suburb specific. In some areas, toilet paper will just not stay on the shelves while in other areas the buying patterns have not changed at all.
This leads to the question of the impact the share market and a potentially B.A.D. flu season will have on the property market.
Referencing the GFC again, it's reasonable to expect downward price pressure at the higher end of the property market – that is, properties $2,500,000 and above. Of course, this will also mean some opportunities for bargains depending on the duration of the share market downturn.
For the other end of the property market - $1,000,000 or less – expect to see 7% plus rises in the main centres as forecast at the start of the year. Why? A few reasons . .
* the potentially regrettable RBA decision to drop rates this month by 0.25% resulting in more sugar for the property market - hopefully this will eventually flow through to retail and services
* the government will want to see funds continuing to flow into the economy and will ensure lending remains accessible to the broader population
* investors will increasingly turn away from the share market and direct their funds towards the property market
* the population predictions have not changed, so housing demand continues to outpace supply year on year
* both Federal and State governments have committed to extensive infrastructure works
* the recovery activity (if they ever get funds out into the impacted communities) in bushfire and flood affected areas will provide stimulus in pockets of the economy – we're already experiencing difficulties accessing trades . . .again.