Welcome to The Buzz May Issue 2020
With changes happening so rapidly how do you keep up and decide what your next steps should be?
“Should I sell? If so, do I sell now or later? Have prices dropped already? Will they drop more? How do I know when it is the right to time to sell?”
In recent weeks I have been asked these questions by prospective sellers, and property owners concerned by the economic impact of the COVID – 19 pandemic.
Buyers are asking the same questions about if & when to buy.
There are many conflicting reports and views, so it can be challenging to make sense of things.
So, let’s have a closer look.
Breaking down what has happened
March quarter 2020 property data shows a turning point across nearly all markets in mid-March. Sales volumes plummeted. Prices have remained stable but this is due to a lack of listings. Early data from April indicates prices falling on a week to week basis.
What these reports show is the lag between settled sales results and the current market. They primarily reflect transactions which occurred before the pandemic. This is the view of analysts at the CBA who believe a 10% fall in prices has already occurred.
Mortgage protection insurance has been suspended, and some financial institutions have instituted other measures. This reflects their view that prices have fallen or are falling and their concerns regarding credit quality and loan security.
In industry forums, the latest anecdotal evidence from Australia’s leading agents is that they believe prices have already fallen in the range of 5-10%. However, some agencies are trumpeting their COVID – 19 sales successes in adverts. But it’s unclear what the sale prices achieved represent. Did they get the price the sellers wanted? Are they a premium above the expected value? This is unlikely especially when you consider that some of the local sales being spruiked in this way are properties which have been on the market for over a year.
What do the experts expect?
This is where it gets tricky as everyone’s crystal ball, sorry, everyone’s modelling has best and worst-case scenarios. The doomsday predictions are of 30% falls in the most impacted markets such as Sydney, Melbourne and markets in a location which relies heavily upon holiday tourism for employment.
REA and Domain report increased numbers of buyer viewings of online listing. This reflects a large pool of prospective buyers considering when to enter the market. That will be when they see prices which they find appealing value and/or when prices become affordable for those who have previously been unable to enter the market.
Economic projections range from the very gloomy to a 2021 bounce. There will almost certainly be further stimulus packages from Governments in the State and Federal budgets.
Everyone agrees the cash rate will stay low. Perhaps for up to three years.
Rental markets will be tough. Previously holiday let properties will possibly flood some markets. The end of the non-payment of rent eviction embargoes will see some difficult choices faced by landlords.
The current lockdown restrictions are already being eased. Within certain limits, on-site auctions and open homes will soon be permitted again in NSW and this will no doubt extend to other states in time.
Most likely in the spring of 2020, we will see a surge in real estate activity.
Any falls in prices, or how much sellers need to reduce their price to transact, will be apparent by then.
Traditional motivations for buying, such as knowing where your kids will go to school in 2021, will prompt buyers to act and take advantage of any improved affordability. Buyers who are waiting in the hope that prices drop further may act rather than risk missing out.
A quick tip: you can never pick the bottom or the top of the market until it has already happened.
The big question – What’s next on the Sunshine Coast?
Will our Sunshine Coast markets repeat the post-2008 GFC experience? If so, expect an initial price drop, followed by a short term rebound, followed then by further price falls over a sustained period.
There are, however, big differences between 2020 and 2008. Such as:
- Massive infrastructure spending
- Stronger domestic tourism (this will likely be the only holiday option for some time)
- A big pool of buyers waiting to purchase
- Interest rates are at and will stay at or near, a record low of 0.25%
Our local properties are still highly desirable to many would-be buyers. They are also lower-priced compared to the capital city markets. Our local economy is underpinned by big project spending which will continue. As such, our markets are more insulated to a downturn than many others. However, the economic impact of COVID – 19 is forecast to be unprecedented.
What your next steps should be
Your next step must be to decide if you wish to:
- Reduce risk by selling now
- Prepare for an improved market when buyer confidence or the need to buy returns
- Sit it all out until it’s clear we are in a sellers’ market again
If you choose the first option, you will need to speak with your agent and work out how to:
- Maximise the value of your property
- Protect your price in a difficult market
- Be prepared to meet the market to transact
Choosing the second option? Speak with your agent to:
- Plan and schedule any property improvements and preparations
- Be ready to take advantage of what may be a short-term opportunity
- Create a marketing strategy that will get the best price for your property
The third option allows you to relax and put your feet up. It may be some years until then, so you’ve got plenty of time before you need to do anything.
Real estate and finance news
Some essential reading in this month’s real estate and finance articles. Check out the latest on:
- Economic projections
- Property market forecasts
- Rental markets
Local council elections have been declared.
The Sunshine Coast Airport international runway will soon be ready to go but who will be flying here?
Tips & Advice
Great coronavirus pandemic tips for how to:
- Clean your home
- Move home
- Manage the buying or selling process in this difficult time
Stay up to date with the latest information:
- An On The Market Report for your suburb/s of interest
Finally, see icons below and follow the links for your copy of the reports and to read the full articles.
Trying to decide your next real estate step in this challenging time? Please call us to have a chat!