Will the Omicron Variant Upend the Property Market?

DG Institute
DG Institute

Published 5:29 am 3 Dec 2021

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Will this highly contagious strain of COVID-19 affect property values? 

Just one month after roughly half of Australia exited lengthy lockdowns, including Victoria who racked up a cumulative 260 days under restrictions, a new threat has emerged – the Omicron variant. 

First identified in South Africa on November 24th, the Omicron variant has since been designated a variant of concern (VOC) by the World Health Organisation, and has been detected in a growing list of countries, including Belgium, Hong Kong, Israel, the United Kingdom, Germany and Australia.

The emergence of the Omicron variant gives rise to several concerns; That the virus may be more transmissible than the already highly-contagious Delta variant, that the virus may be more lethal than the Delta variant, and that existing vaccines will prove ineffective against Omicron.

Attend our FINAL Real Estate Rescue Masterclass for 2021 & set yourself up for the new year

Already, early evidence suggests that Omicron is more contagious than Delta, but overall, very little is known about the new strain of COVID-19. 

So, with this in mind, how will the appearance of this new strain impact Australia? And will Omicron unravel the stellar property value growth seen throughout 2020 and 2021? 

Omicron’s impact upon Australia

Currently, nine cases of the Omicron variant have been detected in Australia, eight of which are in New South Wales and one in the Northern Territory following the return of several Australians from overseas.

With very little currently known about the Omicron variant, it remains to be seen what impacts the virus will have on individuals and society at large. 

The threat of the new variant is already taking a toll here in Australia, with the scheduled reopening of borders to foreign students on December 1st. being delayed for at least two weeks in an announcement made by Scott Morrison on the 29th of November, as a response to the Omicron variant.

This comes at a difficult time for many small businesses who are struggling to find workers in light of the border closures and reduced migrant numbers, who were expecting an influx of new workers to come on December 1st. 

The Council of Small Business chief executive Alexi Boyd said that this halt in workers has come at “the worst possible time”.

“A lot of businesses were looking forward to having the workers coming back into the country. We have to wait and see what the next step is and make sure we get that influx of workers, which is the number one issue we hear from all our members,” she said.

“We have worker shortages and we can’t fulfil what our customers need in the lead-up to Christmas.”

Will the property market be affected? 

Despite the recurring lockdowns, Australia’s property market has enjoyed significant price rises across the country over the past 12 months, with values having climbed more than 20 per cent over the year nationally, adding approximately $126,700 to the median value of an Australian home.

In fact, CoreLogic identified that Australia’s property values have, in some ways, risen because of COVID-19 and not in spite of it. 

Reduced interest rates, increased household savings and the inability to travel all merged to create the perfect storm for a housing boom in Australia throughout the pandemic. 

So how will the emergent Omicron variant impact property values?

Given that the NSW premier Dominic Perrotet has stated that he likely will not be resuming lockdowns amid growing concerns about Omicron, the main factor that will influence Australia’s property market with regards to the new strain of the virus will be the continued border closures.

Rent prices in Sydney and Melbourne already took a hit amid prior border closures, as the lack of overseas travellers and foreign students starved the market of renters. This trend is likely to continue until foreign travellers and students return to the country, serving as good news for renters and bad news for landlords. 

“Anything that pushes out a pick up in immigration will hit the Sydney and Melbourne markets – the apartment market in those cities is dependent on a recovery in immigration numbers,” said Louis Christopher, managing director of SQM Research, while speaking on the Omicron variant. 

Additionally, many residents that were living in and around the CBD’s of capital cities left amid lockdowns, with almost 40,000 residents having moved out of Sydney since the pandemic started. 

Experts, including CBA’s head of economics, Gareth Aird, have predicted that Australia’s house prices will likely decline by 2023. It is very possible this cooldown may be brought forward with a continued delay in migration into the country. 

How to play the property market before the cooldown

With the Omicron variant looming, and predictions of a property market cooldown in 2023, it may seem like the opportunity to invest in the property market has since passed.

Well, think again. 

Property investors will simply have to find ways to manufacture equity over the short term to see rewards and outpace the price decline in Australian properties. 

But how, you ask?

First, you’ll need to find properties that are below market value – so that you make a profit when you buy.

And secondly, you’ll need to uplift those properties and generate sweat equity.

And the best part?

We’re teaching all of this at our upcoming Real Estate Rescue Summit on Saturday the 4th of December. 

We’ll teach you:

  • How to get the most out of court lists
  • How to secure undervalued properties through letter writing 
  • How to deal with real estate agents & get them on your side
  • The latest digital tools of the trade for successful property entrepreneurs
  • What you need to know as we enter 2022

And much, much more.

Attend our FINAL Real Estate Rescue Masterclass for 2021 & set yourself up for the new year

Good Debt Vs Bad Debt With Dominique Grubisa - DG Institute

Lawyer, Asset Protection Specialist and Property Educator

Dominique Grubisa is a practicing lawyer with over 25 years experience. She is a property investor and developer, an entrepreneur with businesses in Australia and Southeast Asia, a speaker, educator, writer and published author.

This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.

About DG Institute

Founded in 2009, DG Institute strives to empower everyday Australians to grow and protect their wealth. Our goal is to provide direction, motivation and inspiration to our clients and help them perform at their very best. We do that through our professional services, in addition to teaching them how to grow their wealth through property and business education.

This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.

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