“It is not the strongest of the species that survives, nor the most intelligent. It is the one that’s most adaptable to change.”
Charles Darwin said that many moons ago and we believe it’s extremely relevant to our current situation.
The world’s changed completely from what it was just a few months ago. And it seems to keep changing on a daily basis.
Add on top of that all the hysteria that’s flying around. If you turn on the news, you hear nothing but negativity. Everybody fears the pandemic, which means they’re totally unprepared. And that’s because they’ve misdiagnosed what this situation is all about.
It’s not just a health crisis.
It’s a cluster of crises happening all at once.
When you realise that, you can start to put in perspective what you need to do to respond to this mess.
As an investor, it’s important that you adapt to these changes so that you come out on top. And to help you do that, we’d like to give you a little history lesson.
Back in the early 20th century, the world went through a similar situation to what we have now because of the Spanish Flu.
This flu gradually spread around the world and we saw similar levels of hysteria. The death toll overseas was horrific, with more than 50 million people dying. The media went crazy, people panic bought, and nobody knew what to do.
Sounds familiar, right?
The difference today is that we have far more access to information. We’re more mobile and we have much better health systems.
That’s one huge positive to take away in this atmosphere of negativity.
But we also want to share with you the Australian government’s response to the Spanish Flu.
Australia quarantined overseas arrivals, closed the schools, and put the country on lockdown. Even the victory celebrations for World War I got postponed.
Again, it all sounds very similar to what we’re seeing today.
The result of these actions was that far fewer Australians caught the virus than in other countries.
Finally, the pandemic ended and life resumed. We reached a level of normality in all areas.
And here’s where it gets interesting…
Once the dust settled, the demand for housing completely overwhelmed the effects of the flu. Property markets in the capital cities didn’t fall at all. In fact, we saw a boom in 1919 and the markets rose by 10% each year until 1921.
And the only reason it slowed down was that the government put tighter restrictions on migration. This had less to do with the flu and more to do with external policies.
But there are two points that we’re making here.
The first is that this is a short-term situation.
If the Spanish Flu pandemic taught us anything, it’s that the response we have right now works. We can’t say for certain when this pandemic will end. But we do know that it’s only a matter of time. And in the long-term game of property investment, it’s a blip in the ocean.
The second is that the markets are not in as much danger as you think.
And the reason for this is simple…
If we go back to the Spanish Flu example, we see that Australia’s population grew by 1.9% in 1919. That equated to about 100,000 people at the time.
This influx of people created a demand for property. And of course, the investors of the day capitalised on that and saw the prices of property increase as a result.
Bring it forward to the modern day and look at our current population growth stats.
Right now, Australia’s population grows by about 1.6% each year. That’s obviously going to get affected in the short term due to the border lockdowns. But when this is all over, we’ll see a similar influx of people coming into the country that we saw a century ago.
Only, the numbers will be even bigger!
That 1.6% represents 400,000 in today’s world. And if the percentage creeps up a bit more, it’s not unrealistic to say that we’ll have 500,000 per year coming into the country.
But why is this important?
It’s a simple case of supply and demand.
When more people come into the country, the housing market reacts. With limited supply, this means that investors have more prospective buyers. And that usually means that they can raise their asking prices, especially for properties in desirable locations.
That’s what we saw in 1919. And we believe that history will repeat itself here.
When this pandemic is over, we’ll likely see the migration rate increase. On top of that 1.6%, you’ll have all of the people who couldn’t make it over this year because of the coronavirus situation.
And that places investors in an amazing position!
First, remember that Australia’s largest capital cities are in a near-constant level of undersupply as it is. We have a high migration rate, even without taking the current situation into account.
With the country on lockdown, the supply numbers aren’t going up.
And when this is all over, we’re going to see even more demand than we have right now.
For you, this means that property is a safe haven investment. This is not the time to sell if you’re holding onto a property. Any price decreases are just a short-term blip because people aren’t buying in the current situation.
And if you’re thinking about investing, now may be the time to strike.
We believe that Australia is set to become a lucky country in the wake of this – at least in regard to property. The key is that you adapt to the situation now so that you can profit in the future.