Property exec predicts W-shaped market recovery

by Madison Utley17 Jul 2020

Since the ripple effects of the COVID-19 pandemic were first felt within the country, Australians have been largely wary of making big property decisions; now, with Melbourne at the beginning of its second lockdown period, the same anxieties seem to be cropping back up as market activity again slows.

However, Antoinette Sagaria, director and buyer’s advocate at Entourage Property, has warned buyers against “trying to catch a falling knife”.

“Waiting for the market to reach its bottom to buy – or top to sell – is a fraught strategy and nigh impossible to implement in real terms in the market,” she explained.

“The right time to transact is when it’s the right time for you.”

According to Sagaria, analysts have been debating whether the property market is in for a sharp V-shaped recovery or the slower and more damaging U-shaped recovery when, in reality, it may be more prudent to expect a less linear W-shaped recovery.

The director emphasised that the property market is “slow to react”, which means in real terms Australians have only seen a small deflation due to immediate factors like the bulk of the population being constrained to their homes at this point.  

In June, CoreLogic reported a slight drop in national dwelling values for the second consecutive month; however, this early on, Sagaria expects to see “a few more highs and lows” before it’s possible to accurately assess the shape of the recovery.

For example, she foresees an upswing after the second-wave of COVID abates and restrictions are eased once more, when public inspections and auctions are again returned.

However, as the banks start recouping deferred repayments and the government moves to raise funds to pay back the enormous debt, prices will likely start moving south again.

“We hope for the V, accept that the U may happen and embrace the W as a possibility too. Truthfully, no one knows what’s going to happen in any market right now,” Sagaria finished.