Coronavirus refers to a group of different viruses or sicknesses in birds and mammals, including humans. The epidemic started in Wuhan, China, on 17th November 2019. It causes infection in the respiratory tract of human beings, which can be mild to more severe and even fatal. The symptoms when a person is infected by the virus could be similar to the common cold and include a cough, tiredness and difficulty in breathing. The incubation time of the virus can range from 1-14 days, with an average of 5-6 days. The recovery time varies anywhere from two to six weeks, depending on the severity of the infection. People of all ages can be affected by Coronavirus.
Older people with weaker immunity or people with pre-existing medical conditions like asthma, diabetes and heart diseases have difficulty in recovering from the virus. The World Health Organisation (WHO) advises people of all ages to take precautionary measures to protect themselves against the virus, like washing hands for at least twenty seconds and following good general hygiene. A vaccine or antiviral drugs to combat this virus are yet to be made.
How is the virus affecting the rental market?
A rental property is the one from which the owner of the property gets paid by the renter or tenant in return for living in or using the property. There are two types of rental properties, residential and commercial. The property holder is also allowed to get hold of tax deductions like mortgage interest and depreciation. So, investing in rental properties can supply easy cash flow and profit value from appreciation. Property management services are willing to help with acquiring tenants but may be working from home for the time being.
The epidemic of Coronavirus has had an impact on the rental property market, starting with the prices of houses which are falling. Until 2019 the property market was developing quite significantly, but now Coronavirus has changed the story. Banks have cut down on rates which can be a positive sign to invest in the housing market. A strong rebound can be expected by the end of 2020, but in the short term, unemployment is increasing.
Many people have lost their jobs, and this has been affecting the economy. As wealth has fallen off, the capacity of people to invest in the housing market has shrunk. So, buyers in very secure jobs have the upper hand. Property investment strategies for secure job holders would include to purchase property now.
In contrast, individuals with reduced income or unstable positions will be taken out of the market for now. People who are looking to sell have to understand that things are weaker at the moment. There will be people who have to sell for whatever reason, which could cause a reasonable financial loss for them. The market is getting more difficult for property investors. There has been downward pressure on rent in Sydney as it is oversupplied. Investors can profit by getting lower rates, but the benefit is nullified by decreasing rent capacity.
Property owners may face problems in getting rent from their tenants. Owners without tenants before the pandemic can get tenants for lower rent or also go tenantless for months as people are locked down and don’t go out. Elderly people in society, living without any support system from families and are primarily dependent on rental income are the most affected if their tenant’s financial position is not conducive.
The rising number of Coronavirus cases globally has brought the financial trajectory downward. With many people losing their jobs or getting reduced pay, it has affected the economy holistically, including the rental property market.