PHOTO: President of REIV, Leah Calnan

As the far-reaching impacts of COVID-19 continue to be felt, the heads of the nation’s Real Estate Institutes have had their say on how they expect it will impact the Australian property industry. 

Responding to Ripehouse Advisory’s Whitepaper COVID-19 vs Australian Property, most industry heads are on the same page, remaining cautiously optimistic.

Across the board, the consensus has been that property, like most industries, will feel the impact of the unprecedented social distancing measures and economic slowdown – but some sectors of the market will be hit harder than others. 

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Yield doesn’t always compensate for risk 
President of the REIWA, Damian Collins indicated the holiday rental and short-stay market would be the one area that bore the brunt of COVID-19. 

“Most of the analysts and myself felt the biggest pain would be in specialised residential property, such as short-stay or holiday rentals or serviced apartments,” he said. 

“A lot of investors get sucked in by the higher yields, but your return from property is always yield and capital growth. But also you’ve got to price in risk as well. I understand a lot of people who are in Quest Hotels at the moment are getting zero payments and they will be for a long time. 

“It’s important to realise that for most investors, you’re far better off sticking with traditional properties in well-established cities that have got plenty of diverse industries that will provide a decent rental income but good prospects for capital growth. That’s because the extra yield doesn’t compensate for that extra risk.” 

Mr Collins also agreed with the consensus that it will be the outer suburbs that will feel the impact the most.