Investors unlikely to rush back to housing

Experts are not expecting investors to flood the residential property market despite the stockmarket turmoil and low rates.

Investors are not expected to rush back to the housing market Picture: AAP

Experts are not expecting investors to flood the residential property market despite the recent poor performance of the stockmarket and a cut to record low ­interest rates.

While the phrase “safe as houses” is commonplace in the Australian vernacular in reference to housing investment, investors are unlikely to turn to the asset class if the banks continue to make access to finance difficult.

My Housing Market chief economist Andrew Wilson said the falls of almost 10 per cent in the ASX last week highlighted the “solid nature” of housing as an asset class, but noted the strong residential price gain of 1.1 per cent nationally in February would not be enough to get the market going.

“Investors are still finding it difficult to secure loans and this is because banks have become quite gun shy in terms of their risk management … and it’ll take some time to shift that around,” Dr Wilson said.

While the Reserve Bank is hoping Tuesday’s 25-basis-point rate cut will boost spending, data released this year from the Commonwealth Bank showed this probably would not be the case. The January numbers showed more than 60 per cent of customers were paying more than the required amount as they looked to reduce their debt.

Savills head of research Phil Montgomerie said low retail turnover will be another hit to shopping centres, which are also exposed to fallout from the coronavirus.

“Neighbourhood centres with high exposure to non-discretionary and day-to-day living will continue to be sought after relative to subregional centres,” Mr Montgomerie said.

“Regionals will somewhat retain their value due to scarcity, densification and centralisation, However, it won’t be plain sailing, especially for those malls that have a high exposure to tourism and high-end spend.”

While the national GDP rose 0.5 per cent in the final quarter of 2019, the ongoing threat to global economies from the COVID-19 outbreak has kept talks of a recession alive.

The office market looks to be the most resilient and preferred property asset class to looming economic threats, according to Mr Montgomerie.