The Corona virus pandemic is in the process of trashing property prices by possibly up to 30% according to some and when it’s over be prepared for the greatest property price rebound since the Great Depression. I want to show you how to invest and prosper in these uncertain times so that you will be ready to hit the ground running when the rebound occurs.
You see… according to the International Monetary Fund (IMF), they believe the world economy will experience the worst recession since the Great Depression.
Scary stuff, right? We are all watching the news, hearing about job losses, businesses struggling, government stimulus packages etc. And if you compare this forthcoming Corona virus recession with our most recent Global Financial Crisis (GFC) global downturn, this recession makes the GFC look like a walk in the park.
The graph below shows that in 2009, world economic growth fell by -0.1 (which is nothing) compared to the world economic growth predicted as a result of the Corona virus pandemic, of -3 percent. In fact, the IMF have only just recently downgraded their projections for world economic growth to -3 percent in 2020. That will make this forthcoming Corona virus pandemic the worst recession since the Great Depression.
If you recall when the GFC hit back in 2009, it lasted a couple of years, if not longer, before the world’s economies started to fully recover. It was a long and slow process to get the world back on its feet – financially speaking – but we did eventually get there.
However I believe this Corona virus pandemic is so much different to the GFC. Yes, it’s different for a number of reasons, the major reason being that Corona virus has adversely impacted every country in the world, not only from an economic point of view but from a health and wellbeing point of view. Whole industries have been shut down, including every airline, and countries have closed their borders… something that has never happened before.
The most distinct difference is the speed at which economies have fallen thus far.
What do the numbers mean?
Well, if you believe the IMF, then we are going to bounce back as quickly as we have fallen. Governments around the world are doing all they can to stimulate their economies in preparation for the rebound.
In fact, according to the IMF…
“Assuming the pandemic fades in the second half of 2020 and that policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains, we project global growth in 2021 to rebound to 5.8 percent.”
Wow, what a jump in growth, from -3 percent in 2020 to 5.8 percent in 2021.
Think about it for a moment…
Once the pandemic is contained and self-isolation restrictions are relaxed, we’ll go back to normal… kids will be back at school, people back at work, airlines starting up again, people travelling, shopping centres opening up etc.
And if you are like me, after 6 weeks of self-isolating, I’m itching to get out and about. I’ll be rebooking all my holiday travel, putting my daughter back into school and organising family picnics and Sunday drives… not to mention catching up with friends and family. I reckon I’m going to have weekend after weekend of dinner parties and bbq’s so that I can eye-ball all my loved ones. As much as I enjoy the virtual coffees and wines with my nearest and dearest friends and family, I am looking forward to seeing them all in person.
So what will happen is that we will all be getting out and about, spending our money and re-igniting the economy again.
Let’s take a look at some more data from the IMF and more specifically… Australia.
In the graph below, Australia is grouped in with other advanced economies (our population and economy is small compared to other countries) however take a look at the numbers. The IMF’s projected economic growth for Australia in 2020 is -4.6 percent however for 2021, it’s projected to be 4.5 percent. When compared to other advanced economies, our fall in economic growth is not as significant as theirs (which is good news) and our projected growth for 2021 is better than most at a solid 4.5 percent.These numbers show a quick downturn and a fast upswing.
What does this mean for the property market and will the property market crash?
Well under the current self-isolation restrictions, auctions have been moved to being online, and open houses are by appointment only.
According to Core Logic, the number of properties up for sale each week is rapidly declining and there are numerous reports of property prices falling by up to 30 percent.
So yes, the property market will be hit hard however, with every crash there is a recovery. This is where there is opportunity for savvy property investors.
The Opportunity of a lifetime
Imagine, if you got into the property market this year when property prices had fallen….. how happy would you be when the property market rebounds next year.
Imagine the easy ride of capital growth you would enjoy and the opportunity to build your wealth sooner and get out of the rat race faster.
According to the IMF this is what is about to happen, so make the most of the opportunity now and do what you can to prepare yourself for the next property boom when it occurs next year.
This is it… this is your time… 😊
And as Warren Buffett says…
P.S. I have some exciting news coming your way, so keep an eye on your inbox.