PHOTO: Property prices declined in only one of the five years following the financial crisis of 2008, but past performance is no indicator of future returns.ABC News: Ian Cutmore
Global markets have lost trillions of dollars, central bankers are rolling out extraordinary measures to stop the financial system collapsing, and even the usual safety net of gold is dropping like a stone. But one thing is holding up for now — the Australian property market.
“Business as usual this weekend,” crows an email from a real estate agent in Sydney’s inner west, which is offering virtual inspections and live-streamed auctions in a nod to social distancing.
“2020 ushers in new moderate growth cycles” is the title of this week’s letter to clients from an agency in Melbourne’s northern suburbs.
It lists low interest rates, a pick-up in demand from retirees looking for rental returns, and a weak dollar luring in offshore buyers, as reasons that real estate remains a “safe” and “capital preserving” option. In other words — safe as houses.
In past economic meltdowns Australian homes and apartments have fared well. In the last Australian recession, the one we had to have, home prices declined only around 4 per cent in 1990.
Property prices declined in only one of the five years following the financial crisis of 2008; going backward on an annual basis by 4.8 per cent in 2010, before rebounding 2.1 and 9.3 per cent in the following two years.
But past performance is no indicator of future returns.
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