What impact is COVID-19 having on the property market?
Adrian Reed 31st March 2020
We’re here to help you navigate the excess of information and understand the main state of Noosa’s property market. Below are the crucial realities learned from us and other property-related businesses that are at the forefront of the changes taking place.
Fear and uncertainty rule at the moment
No one really knows what the impact on residential property markets will be although there has been plenty of commentary out there. Our advice to sellers is to be patient as the past week has proven there are genuine buyers in the market looking for housing solutions. If your property is a fit then we will see the activity on it.
For buyers there will be “seller motivation” that surfaces during the coming months, we have seen wholesale job losses across the tourism and hospitality industry Noosa’s largest commercial sector. Price discounting is likely to be seen in the $800k – $2m price range, there could also be movement of secondary homes and holiday/investment properties. Equally, it is also undeniable that stimulus and low-interest rates will prime real estate markets and when the turnaround happens it could be fast and it could catch a lot of buyers off guard as the market recovers.
Virtual Inspections and the new world order
One observation in the past week is that Reed & Co. share of listings has jumped vs our competitors; vendors perhaps siding with an agent who can deliver innovative solutions in a world demanding innovation, technology and a lot of energy. In previous downturns, there was a flight to experience and older, more established agents but this time around there will be a movement towards agents who can do more with less – the customer will be the ultimate beneficiary of this.
Whilst technology will come in to play over the coming months, there will always be an underlying need for people to physically inspect a property they intend to live or invest in.
My belief is that video marketing will continue to rapidly improve, become more factually based and will become more commonplace as the market adapts. As for inspections, I think people will wait until it is safe again before going too far down the “virtual inspection” path and uptake on this front might be different from agent to agent for now and probably depends more on the buyer profile than the price point of the property. Live, 360-degree virtual inspections are the best solution we have seen so far, tech that Reed & Co. developed and implemented last week.
Perspectives on Change
I have summarised some brief learnings from conversations with those in property-related businesses this week:
- Refinance cash rebates of up to $4,000 are available for refinancing your home loan and interest rate offers to start at 2.09%. It’s very important to keep your accounts up to date and act while you can. For those self-employed, don’t wait until tough times arrive before you ask for buffers and to get a better deal. Act while you can, and you still have the revenue to prove your business performance.
- Slower bank application turnaround times due to offshoring of processing operations overseas are now unavailable for example a major bank is taking over 30 days to pick up an application for a first assessment.
- Redraw is not your money, use an offset for repaying your loan or consider moving redraw funds out to a bank account. Banks may move to protect their balance sheets by removing funds from loan redraws.
- A fitting piece of advice during this unprecedented time where conveyancing matters are experiencing unavoidable delays and/or termination is don’t be scared of what’s to come but rather be smart. In that deals that are conditional on essential terms need to be closely monitored to see conditions are satisfied and a withdrawal from a Contract of Sale not unnecessarily elected as an option out purely due to property market decline.
- In today’s current situation, even contracts deemed unconditional are seen as not entirely safe and whether we like it or not to get successful completion of a contract we may need to embrace technological advances such as PEXA sooner than thought and be ready and willing to negotiate to keep a deal alive.
- It is now more important than ever to seek the advice of a trusted Solicitor when it comes to including favourable and essential clauses, to not only ensure you put your best foot forward when entering into a Contract of Sale, but most significantly successfully completing a Contract.
- Sales off the plan will become a challenge as buyers look to minimise risk.
- Project and A-grade sites are still in high demand as the turn around on medium-sized development can be 2-3 years.
- Investment property purchases will fall away.
- There are buyers looking for deals that are in good cash positions.
- Buyers that have sold and are in a cash position are looking for a home and are demonstrating urgency.
Marketing / Advertising
- Our suppliers are coming to the party and offering some good deals in the online and digital marketing space as well as styling and staging.
- Rental Managers have been inundated with new rental listings – a combination of AirBNB’s which are no longer viable, withdrawn sale properties and vacancies caused by tenants experiencing a change of circumstance. Expect downward pressure on rents if the supply side outpaces the number of tenants out there, lower interest rates will allow landlords to absorb a drop in rents.