Let’s be frank; the year 2020 hasn’t been the kindest to Australians and to everyone else in general. As of this month, parts of the country have either been experiencing or bracing for a second wave of the coronavirus. But what does that mean for the housing market, specifically for those who want to buy or sell their property? Let’s take a closer look at the Australian real estate market for 2020.
The Australian real estate market situation
At the start of FY20, we saw lending restrictions begin to ease, investor confidence rise, and the RBA started reducing the official cash rate.
This optimism carried over into 2020 with auction clearance rates in the high 70 percent and vendor confidence returning, pushing listings above average for the first time in a long time. A sense of recovery was in the air, but with the approach of March and COVID, everything was brought to a standstill.
With lockdowns enacted and real estate activities restricted, we saw a downturn in stock on the market. Upon restrictions easing , we saw a slow recovery but there were sure signs that buyers were milling back in, curious to see what was available. Record buyer activity was observed on realestate.com.au, and correctly-priced homes were flying off the shelves.
After a brief dalliance with reopening their cities, parts of Australia are now closing down again in varying degrees of lockdowns. This has caused much uncertainty in different industries as the supply chain is interrupted and operations have halted. Surprisingly, despite the difficulties experienced in other sectors, the property market has remained afloat.
Dwelling value falls remain mild since the onset of COVID-19. The change in national dwelling values was -1.6% in the 3 months to July, led by a -2.0% decline across the capital city markets.
According to experts, although residential property prices have gotten lower since the pandemic, the decline hasn’t been as steep as previous market crashes in history.
Perhaps the most resilient market to emerge in during this period is in ACT which actually saw property values go up since March. CoreLogic’s Eliza Owen attributes this to the lower number of COVID-19 cases in the territory, relative job stability, and a lot of indispensable jobs in the public sector.
In general, capital cities saw drops in real estate prices but the opposite can be said for regional homes. Regional South Australia, Northern Territory and New South Wales all saw some increases in price. This may all continue as more buyers seek a change in living situations, opting for less crowded rural and coastal towns while COVID-19 pervades the country.
It remains to be seen how the newly-imposed lockdowns will affect the Australian real estate market in 2020 further, but thus far, people are still buying houses –in fact, the demand seems to be outpacing the supply as there are few homes being listed for sale and those are snapped up very quickly.
What does this mean for Australians?
If you’re buying a home in the time of COVID-19
In a nutshell, if you’re looking to buy or build a house right now, predictions mostly lean towards prices dropping. While that isn’t an automatic “yes, it’s time to buy,” there are a few factors that signal that it might be a good idea to consider buying soon.
Naturally, one thing to consider is whether your income stream is reliable at this time. Businesses have been shuttered whether temporarily or permanently, so it’s important to take stock of the situation and whether you can afford to take the plunge on a new house now. Depending on your circumstances, it might be more prudent to wait, especially as some experts believe that there may be price drops for at least the next one to two years.
But there’s certainly no lack of support towards those who want to move forward. Interest rates are at historic lows and mortgage repayment holidays are still on-going for borrowers until at least the beginning of 2021. Plus there’s the HomeBuilder Grant, which awards eligible homeowners or buyers $25,000 to build or renovate a home, the government’s attempt to ignite the construction industry.
If you’re selling your home
For those on the selling side, there will also be some challenges. The lockdown restrictions in Victoria mean that open houses are on-hold whilst virtual tours, online auctions and private inspections will take it's place in order to comply with physical distancing rules. The government has also created a set of health and safety guidelines to follow for home inspections.
As stated previously, there are still a considerable number of people looking to buy homes at this time. Of course, given the economic impact of COVID-19 and the accompanying lockdowns, there’s still a lot of uncertainty in terms of job security.
On the other hand, record low interest rates mean that there will be ready and willing buyers to purchase properties that spring on to the market and are priced well. In fact, the number of home buyer searches on realestate.com.au continued to surge and is now up 72.5 percent from the lows experienced at the end of April. This combination of low stock and high buyer demand makes it an ideal time to sell, particularly as right now is the most stable the market is likely to be for some time.
With some Australians choosing to minimise their lifestyles and relocate outside the crowded capitals to the more spacious rural and beachside locations, you may expect some competition if you plan to put your home on the market.
How to do it right
Naturally, you’ll want to make sure that the direction you take with your property is the right one, whether you’re selling or buying a home in Australia. The best thing you can do to ensure that is to get in touch with an experienced real estate agent. Admittedly, these are unprecedented times in more ways than one, but a seasoned property agent will have assessed the situation better than anyone else and will be able to provide you with invaluable advice for how to buy or sell your house.
And Upside’s real estate agents have been following the trends in Australia’s real estate market both before and during the pandemic so we can guide you in making the right moves. Call us and we’ll help make the process of buying or selling your home as painless as possible, and make sure that it’s all done safely.