House Prices, Recessions, and Coronavirus: Your biggest property questions (and our answers)
** Originally published by RE/MAX Australia (remax.com.au)
With a worldwide pandemic seeping into our lives and creating such a far-ranging effect on our everyday life, it’s unsurprising that sentiment in the Australian real estate market has become cloudy. People (maybe even you) have big questions about what’s going on with property…
- Will house prices drop?
- Is it a good time to sell?
- Should I buy a house now?
- What advice about buying or selling can I find?
And of course, what does the future hold for real estate in Australia?
To get those answers, we went straight to the experts. Several of our best agents throughout Australia took time out to give their thoughts on property, the coronavirus, and what’s happening in the markets.
Is this a good time to sell my house?
We get it: there’s a lot of uncertainty and worry floating around. Open homes and auctions shut down practically overnight. At the height of restrictions, just driving past a house to look at it could be a fineable offence.
But there was a consistent theme in the agents we put this question to: a lack of competition. Dan Elliott in our Morningside office noted a lack of properties on the market, even though there were still buyers with finance ready, still working and serious about finding their next home or investment.
It’s exactly because of such doubt that many have held off selling their home for the foreseeable future. However, people still need somewhere to live and savvy investors are getting in before the recovery kicks off. When you do decide to sell, make sure you still follow the rules so you can get the best price possible.
Perth: Homes flying off the shelf!
“There’s more attention on each property with less homes on the market; down by 43%, with 5038 properties. Selling time is faster; 66 days, down from 85. Home opens are allowed again and activity and enquiry is high. Offers are coming in close to asking prices.”
Ken Williamson, RE/MAX GBT Realty, Nollamara
Should I buy a house during this time?
If it’s a good time to sell, does that mean buyers should sit it out for the time being? Well, our experts were almost unanimous in saying no!
Months before any of us had heard the term “COVID-19”, interest rates were already at record lows. The pandemic has brought some downward pressure on prices, though most of our agents believe this will rapidly reverse once things settle down. Plus, you might also find some fantastic incentives buying from developers during this period that won’t be there once normal life resumes.
Good for buyers AND sellers…
“With competition between buyers a little thinner, the opportunity for buyers to get those negotiations over the line and in front of sellers is encouraging sales activity. Competition for sellers has also weakened, as other potential sellers decide to hold off on bringing their properties to the market.”
Shane McLeod, RE/MAX Gold, Gladstone
Will house prices drop in Australia?
Property isn’t immune to the financial stress the pandemic has caused, and our agents have seen slight drops in some areas.
However, as Morris Short from our Parramatta office points out, there’s still buying demand in the Sydney real estate market. With fewer houses available, prices in the Harbour City are holding relatively steady. The same may well be true for other capital cities.
David Cotterill at Stones Corner in Brisbane, felt that while there might be dips, they’re likely to be short term and will recover quickly once jobs are restored. Unless people are looking to only hold for a few months (such as flipping), buying property now would be a sound decision.
What other questions are buyers and sellers asking about the real estate market?
The pandemic may not have had a huge impact to date, but it still pays to find out as much as you can before you get into the market. Here’s a list of questions (beyond the ones we’re answering today) that buyers and sellers are asking agents:
- How is the market at the moment?
- Are you still open and doing open homes?
- Will my finance get approved?
- How motivated are the owners?
- What is the lowest price the owners would consider?
- Has there been a drop in prices?
- Are properties selling at the moment?
- Are you busy?
- How will you market my property without it getting stale?
- What happens if the seller or tenant in the property is isolating at the time of settlement?
Plus, there are often questions around local conditions.
What are your property predictions post COVID-19?
With fears of a coronavirus recession lingering, calls of “business as usual” would be perhaps overly optimistic. However, many of our agents think the Australian real estate market is primed to bounce back faster than expected.
Once unemployment recovers, more buyers will enter the market and create more competition for houses, which might give prices a short-term bump upwards. However, as sellers regain their confidence, more homes will become available and the market will stabilise.
Some agents view the bounce back from a longer perspective. Stuart Legg in Robina believes the global economy might slow us (and property) down for some time. If unemployment doesn’t return to pre-pandemic levels, we might see house prices stall. Leon Lee from our Williams Landing office agrees, citing lower immigration as a reason for lower demand and prices in the near future.
A Fast Recovery?
“Once the health emergency is over the market will bounce back and rapidly. Furthermore, for prices to drop, there needs to be a supply and demand inequality. This is currently not the case – both buyer and seller numbers have dropped equally.”
Daniel Burrett and Katie Knight, RE/MAX Success, Toowoomba
Finally, any advice to buyers and sellers jumping into the market?
If you’re ready to jump into the market as either a buyer or seller, make sure you go armed with the best advice you can. Here are some nuggets of wisdom from our agents across the country:
“Buying and selling in the same market negates any benefits or detriments. Good property always attracts attention and properly priced, it will sell.” – Morris Short, RE/MAX Xtra
“Our first homebuyers are confident at the moment and have been watching closely over the last few years. They can see prices have started to rise in both rental and sales, and know the bottom is gone.” – Shane McLeod, RE/MAX Gold
“I wouldn’t hold back on buying the right property because of a chance that it may drop in price in the short term. It will soon recover and be worth more than you paid for it.” – David Cotterill, RE/MAX Experience
“Banks are very stringent on lending and asking for employment contracts even on the day of settlement.” – Ken Williamson, RE/MAX GBT Realty
“It really depends on your personal circumstances and timing.” – David Kopelke, RE/MAX U
Use technology to “soft sell” your home
We’re still open and can do virtual market appraisal and virtual open homes. We can do soft marketing for now and launch full on once the market is hot again.
Gizzelle Powell, RE/MAX Lifestyle Marketing, Penrith