The COVID-19 situation has significantly affected the growth figures for the Australian housing market in 2020. Depending on what you read, some say this is only the beginning, while others keep a more positive outlook saying we have already passed through the eye of the storm.
Regardless of individual opinion, here’s what we can expect in the coming months.
Lower Property prices
With introduced interest rate cuts and an increased number of businesses closing, it’s evident that housing prices will slump further within the next few months. According to economist Shane Oliver, the worst-case scenario will be that housing prices will drop by 20%. The minimum housing price fall we’ll see will be 5%. This is suggested as the best outcome during this economic scenario. The rationale behind this is, if individuals no longer have jobs, it results in less spending and reduction of mortgage repayments, resulting in more selling. Whilst there are predictions of how low the housing prices will fall, experts don’t want to forecast how low they will go, causing more uncertainty in the market.
If/when prices fall, it is assumed that more properties will be put on the rental market, leading to rental prices for certain types of properties to drop. However it is too early to be certain of this change.
With the recent measures introduced by the Australian Government, that there can no longer be any public house inspections or auctions. This has made many Real Estate companies re-think the way they run their business.
Privately booked, one person appointments to view a property has become the new ‘norm’. Though Real Estate Agents have said they’re quieter; they have found that the individuals that book private inspections are serious about buying and ready to make a deal. This has minimised the amount of ‘time wasters’ in the current market and created efficiencies in the real estate industry. We may even see a continuance of this strategy well after the COVID19 situation has passed.
Virtual House Tours
Some people are still nervous about attending house inspections, so companies have quickly adapted and are allowing for ‘virtual’ inspections. Even though virtual house tours have been available for years, with the new social distancing rules, people are having to utilise this technology to be confident with purchasing a house online.
From pre-recorded videos or video calling with a client, Real Estate Agents are still able to offer the same service as they did before COVID-19. Applications like FaceTime, enable a Real Estate Agent to show a property live. This allows the client to ask questions in real-time – as they would have in person.
Public auctions are deemed stressful enough, but now it’s a whole new game with the move to online auctions. On April 4th 2020, Domain reported that there were 1248 auctions scheduled throughout Melbourne prior to the ban on public auctions. After the announcement of the ban, 65% converted to private sale, 6% continued with an online auction and the others are still undecided on how they want to proceed.
Whilst many people attended the online auctions to see how they ran, with no intention of bidding, many pre-registered buyers still showed their interest.
For home buyers, online auctions may not seem appealing but they allow for further flexibility. They can be held anytime or day, without the need for it having to be held on the weekend. Don’t let this make you lose hope! A rebound in the property market is predicted for the second half of 2020 or start of 2021. This crisis will end, we just have to ride it out. In the meantime, you need to utilise technology and adapt to the new ways of doing things.