There are close to 100,000 cases of Covid-19 AKA Coronavirus and 3,385 deaths worldwide as of March 6th, 2020. Here in New Zealand, the fourth case has just been confirmed and on March 5th the stock market dipped. All three main indexes, the Dow Jones, S&P 500 and the Nasdaq Composite were down by between 3.1% and 3.6%.
Understandably, people are concerned, and some are asking if the virus will affect their other investments – including the New Zealand property market.
There’s been a lot of panic surrounding this virus, with toilet paper, hand sanitiser and canned food flying off the shelves. Scary as Coronavirus seems, Ministry of Health experts have stated that, with continued vigilance, the chances of a full outbreak in New Zealand are low. That means there’s no need to panic, just be careful, wash your hands as often as possible and self-isolate if you’re sick.
The panic surrounding Coronavirus may have an effect on the New Zealand housing market if Kiwis get spooked and delay big financial decisions. In fact, Westpac economist Dominick Stephens recently forecasted that the NZ housing market will suffer in the short term:
“The currently rampant housing market is likely to skid to a halt, with price growth slowing sharply in the June quarter,”
Luckily, the longer-term outlook for the housing market is far more positive.
Dominick Stephens at Westpac expects that the effects of the coronavirus on the New Zealand housing market will be short-lived. In fact, once the worst of the virus has passed, asset prices (including property) are expected to start increasing.
That’s partly because the Reserve Bank of New Zealand is expected to cut the Official Cash Rate by 0.25 basis points on March 25 and then again in May. This should drive retail interest rates in New Zealand down to their lowest ever levels, making it cheaper and easier than ever to secure a home loan or refinance your mortgage.
Few things increase house prices faster than cheap credit, so we may see another price surge once the Coronavirus panic has died down and the banks have passed on low interest rates. In fact, if you’re looking for an affordable first home or investment now could be the best time to look – there may even be less competition from other buyers which usually means lower prices and easier buying.
Coronavirus is new, it’s scary and it’s in New Zealand. But, instead of giving in to panic, let’s just take a step back, be careful and keep doing what we’re doing – that includes going to work, buying property and washing our hands (and not stockpiling toilet paper).
If you’re worried about Coronavirus check out the advice from the Ministry of Health here. If you suspect you have the virus, you’re showing symptoms, or you’re unsure, don’t go to your local GP as you may risk infecting others. Instead, stay at home, self-isolate and call the Ministry of Health’s dedicated helpline on 0800 358 5453 (or for international SIMs +64 9 358 5453). It is free and available 24 hours a day, 7 days a week.