Buyer interest up a 50 per cent despite COVID-19 in boost to real estate market
Interest in the real estate market is up an incredible 50 per cent on this time last year, dramatically defying the COVID-19 downturn.
NSW
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Interest in Australia’s real estate market is up almost 50 per cent on this time last year despite the challenges and uncertainty of the coronavirus pandemic.
Confident buyers are flooding the market as it defies the COVID-19 economic downturn and shows early signs of helping to propel the nation out of our pandemic-enforced recession.
Prospective buyers have adapted smoothly to the new digitised ways of doing business as they continue to search for their new home. And dwelling prices are holding firm in another sign Australia will avoid a property market crash due to coronavirus that was predicted to be as great as a 30 per cent fall.
According to data released by Australian property platform realestate.com.au, search in NSW is up 39 per cent on this time last year. In Victoria it is 40 per cent greater than mid-2019, in Queensland it has lifted 33 per cent and in South Australia it is up 40 per cent.
It is a strong indication of Australian’s faith and confidence in our property market, in stark contrast to the volatility of the Australian Stock Exchange.
“The buying side of the market is holding up a lot better than I expected,” said realestate.com.au chief economist Nerida Conisbee.
“We expected to see the search activity to continue to drop off as a result of COVID-19. But what we saw instead was that the first two weeks after lockdown [in late March] there was a dramatic fall off but since then we have seen an enormous pick up in search. The market is very active.”
“The real estate industry has been good in adapting to the necessary changes put in place, as has the banking system.
“However there is a significant supply and demand imbalance, the buyers are out there, sellers less so.”
Open home inspections have been changed to private viewings and in-person auctions have been banned. That has resulted in a huge increase in digital inspections and also private treaties.
Prospective buyers have viewed more than 3.16 million digital inspections since March 30, with a 325 per cent increase in views of 3D tours since the first week of March.
Auction clearance rates have been sliced in half from those before COVID-19 hit. According to property data provider CoreLogic, the national clearance rate was just 40.5 per cent last weekend across our capital cities with 44 per cent of homes withdrawn. This time last year it was 50.4 per cent. The previous weekend recorded a 39.1 per cent clearance rate, as opposed to 43.9 per cent the same time last year.
According to CoreLogic estimates, 19,951 homes were sold nationally in April this year. That is down on the 29,930 sold in April 2019. However CoreLogic says the latest results and auction clearance rates “should be interpreted with caution” as it seeks to confirm the status of scheduled auctions in the wake of COVID-19.
Nationally home prices rose 0.3 per cent in April.
Due to the end of on-site auctions, many seller’s agents are preferring to conduct an expressions of interest campaign, to generate buyer competition, that results in a private treaty sale. While some buyer’s agents claim as many as 80 per cent of their purchases are off-market properties. Prior to COVID-19 auctions constituted 15 per cent of the national sales market. Now online auctions make up just five per cent.
Either way Ms Conisbee said the impressive search results were likely a reliable lead indicator of sales.
First National Real Estate chief executive Ray Ellis said the pandemic had given more Australians time to think long-term about the lifestyle they want and the home they can afford.
“Perhaps it’s one of the few times there has been that consistency of thought,” he said.
“People have more time to sit around and think about things, about where their and their families’ lives are headed. The share market is so volatile and an overseas holiday won’t be happening for a while so their thoughts will turn to their home.
“Property has always been a great retreat for Australians and as wider economic conditions have changed, the economic conditions of households have changed. Homeowners are querying whether they can afford to buy, or whether they can afford not to sell.”
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Australia’s successful attempts to prevent the spread of COVID-19 have also inspired further confidence in buyers.
According to CoreLogic, capital city home values are up 9.8 per cent on this time last year, which also means it is a good market for sellers to be a part of.
“We’re not seeing huge prices but fair prices are being achieved when you look at recent sales and comparable sales moving forward,” said Thomas McGlynn national head of sales at The Agency.
“There is still a healthy amount of people with an appetite for buying real estate. There are a lot of people considering buying their first home, upgrading or downsizing. People revert to proven performers at times like this and property has survived many peaks and troughs previously.
“Entry level properties are still performing. If you have secure employment, if you have a deposit, banks are looking favourably upon lending to you. At a time when interest rates are so low and you can secure your future why wouldn’t you buy instead of renting.
“Those entry level properties and those around median prices are proving to be very, very popular.”
FAITH IN THE MARKET
Home buyers Steve Molloy and his wife Alexandra have their hands full juggling young children, the impact of the COVID-19 epidemic and house hunting.
But nothing is deterring them from the search for their dream home for themselves and their daughters Stella, 2, and newborn Stephanie.
“A lot of buyers are sitting on their hands and we didn’t want to do that,” Mr Molloy said.
“I don’t think house prices will be affected much by all of this and after getting married and having kids, buying a home was always the next step for us.”
Mr Molloy is a senior product designer with his own company LOMAH Studios and harbours political ambitions, Mrs Molloy works for the Australian Defence Force. The flexibility they enjoy in their jobs is an advantage in their property search. They are looking in Sydney but also as far afield as Canberra.
“We have a lot of faith in the Australian property market. It is the driver of so much of the economy and you would imagine the government will do everything they can to sustain that,” Mr Molloy said.
“We feel we have a good understanding of the market and what we are looking for. We’ve been looking at a lot of properties, have narrowed things down and are ready to pounce. “We’re hoping for value for money in a good area that will sustain us into the future. If we can get that it will be a good news story for us, something positive out of COVID-19.”