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.

COVID-19 continues to shape the property market landscape in 2024. Across Canada, Texas, and California, its impact remains palpable. Property prices fluctuate amidst uncertainty, affecting buyers and sellers alike. Virtual property tours gain traction, offering a safe alternative.

Government aid cushions homeowners, but concerns linger over evictions and foreclosures. Mortgage rates reflect economic turbulence. Commercial real estate faces unique challenges. The future post-COVID-19 remains uncertain, with real estate market trends evolving.

Fear and Uncertainty rule at the Moment

No one 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.‘s 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 into 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.

I believe 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

The impact of COVID-19 on the property market and economy is profound. Social distancing and remote working have shifted preferences, affecting urban vs. rural living choices. Property investment is influenced by financial and legal considerations.

Mental health aspects of moving during COVID-19 are important to address. Tips for social distancing during property viewings have become crucial. Additionally, the pandemic has accelerated the digital transformation of the property market, shaping its landscape today.

I have summarised some brief learnings from conversations with those in property-related businesses this week:

1. Finance Broker

Refinance cash rebates of up to $4,000 are available for refinancing your home loan and interest rate offers 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.

2. Residential Lawyer

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 is 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 favorable and essential clauses, to ensure you put your best foot forward when entering into a Contract of Sale, and most significantly completing a Contract.

3. Property Developer

Sales of the plan will become challenging as buyers look to minimize risk.
Project and A-grade sites are still in high demand as the turnaround on medium-sized development can be 2-3 years.
Investment property purchases will fall away.

4. Buyers

Buyers are looking for deals that are in good cash positions.
Buyers who have sold and are in a cash position are looking for a home and are demonstrating urgency.

5. Marketing / Advertising

Our suppliers are coming to the party and offering some good deals in the online and digital marketing space, styling, and staging.

6. Property Managers

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.