Caution advised for investors eyeing property market

PHOTO: Home owners may be reluctant to sell during the current economic uncertainty. Photo: 123RF

A property investor says property shortages are likely if the economy goes into recession because of the Covid-19 crisis.

Some economists are predicting a price drop of up to 15 percent over the next year, while turnover could fall by about a fifth.

Olly Newland said people simply will not sell unless they have to.

“People do not like taking losses, it will only be the most pressed people who will sell into this market.

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“It’s usually divorce or death or bank pressure that forces people to sell, and that’s a very small part of the market.”

Newland said it could be risky investing in an uncertain market.

“There may be more shocks to come, hopefully not. I’d be very cautious about investing, unless you’ve got a very large equity and can afford to lose.”

Property like many investments always has the potential to be risky, he said.

New rules for real estate under alert level 3

Meanwhile, as the country moves into alert level 3 at 11.59pm tomorrow, all real estate work is still required to be done remotely wherever possible.

Buyers and sellers who deferred settlement during alert level 4 may now be able to settle as long as both parties agree. Buyers and sellers can also move house.

Those wanting to buy a property that has tenants will be affected by new government protections against terminations within the next few months.