Broken Toes & Coronavirus
I am writing this as I sit in Auckland’s children’s hospital. My daughter broke her toe doing a backflip on the beam at gymnastics. There were tears when it happened and then a river of tears when she saw the x-ray and faced the harsh reality that she probably won’t be able to compete this year. Gutting when you train 20+ hours a week – and given she’d only just recovered from elbow surgery and was back to full training.
We can’t change what has happened, our daughter has to be patient – work through the process of scans, assessments, surgery, and recovery. But in many ways that is the easy part. For her, the hard part is remaining mentally strong. One surgery and recovery process is hard enough, but to go back down the route of another recovery after just having recovered is even harder. However, if she wants to return to competition gymnastics, then she has no choice but to knuckle down mentally – remind herself that life will be better on the other side of the necessary medical procedures – and use the process to grow mentally stronger, become more determined, which will surely help when she gets back on the beam.
And here we are in the middle of the Coronavirus. The housing market in NZ was just starting to take off again and now we wonder what impact the virus will have. Initially I thought it would be another SARS – and I still believe it will be similar in the sense that as time goes by we’ll see more and more people recovering and appreciate that it won’t kill half the world’s population. But what I hadn’t anticipated, is the response. People fighting over toilet paper, corporates shutting down client meetings and prohibiting international travel. There is now no doubt the virus will impact the global and local economy. That hurts, and what hurts even more, is the knowledge that there will need to be some surgery and there will need to be a period of recovery.
Will it impact property prices? Well, once again what we know is:
- in NZ there is no shortage of demand for housing,
- we can be fairly certain that interest rates won’t go up. Rather, they are more likely to go down given the FED and the Aussie Reserve Bank cut rates by 50 basis points last week. The RBNZ is likely to follow suit, even if just by 25 basis points. That is likely to result in mortgage rates falling further, making it more affordable to buy housing as well as commercial property.
- There is a lot of money looking for a home given the low deposit rates. The share market has taken a knock (though it surely will recover), and therefore property looks even more attractive.
Will this be enough to keep fuelling the recent housing price growth? Perhaps not. Will it be enough to stave off a decline in property prices? That may depend on how long the Coronavirus spread keeps going or perhaps more importantly, how long the globe responds, rightly or wrongly, by shackling economies with travel restrictions.
What we do know is that panic does not help. Rushing out to fight over toilet paper in the supermarket is not only stupid, it distracts us from calmly doing what’s necessary and exploring the possibilities. In a property sense, let’s not panic and sell up properties from fear that property prices could drop 50%. Instead, let’s get mentally strong – do what’s necessary – pay the mortgage, keep properties maintained, and then….look for opportunities. With the potential of interest rates falling, won’t that be an opportunity to consider another purchase….perhaps from a panicked seller?
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