Date: 24th March 2020
COVID-19 is the issue on everyone’s lips. If you’re a homeowner or looking to become one, you’re probably asking how all this is going to impact the property market.
At Frank Gordon, we’re real estate agents, not economists or clairvoyants so we’re not going to make predictions. Instead, we’re going to keep you informed on what we’re seeing and explain how we’re adapting our services in this period of change.
The last global pandemic was over 100 years ago, and the last economic recession nearly 30 years ago. The world was a different place and this is why it is difficult to predict what happens next. As real estate agents, we monitor the market closely and this is what we have seen so far,
- Prior to the COVID-19 we saw a great bounce in 2019 with rising property prices across Melbourne. Additionally sales volume had been decreasing YoY leading to strong buyer competition.
- Since the outbreak the RBA and Government have announced measures to provide phenomenal support to the economy. The reduction of the cash rate (Now a historic low of 0.25%) will support the property market, ease household budgets and assist small/medium businesses.
- Australia’s financial system is resilient with record low interest rates, government stimulus and a low dollar to assist exporters.
On a micro level in real estate,
- Frank Gordon has been experiencing a healthy level of buyer demand. We have transacted just over $4,000,000 in sales in the last two weeks.
- The Melbourne clearance rate is sitting around 67%, up from 47.2% at the same time last year
Where are properties values are likely to head?
Based on the closest scenarios in recent past, economists are tipping prices to recede and days on market to increase.
Housing is an asset class that thrives on confidence and at the moment, consumers are understandably worried. Confidence affects our desire to make major changes which may lead to fewer property listings and transactions in the short-term.
Having said that, when limited supply meets consistent demand for lifestyle property we always achieve results. People do not put their lives on hold indefinitely and there are plenty of demand-side drivers for Bayside housing;
- Mortgage rates are the lowest they’ve ever been with little prospect of going higher for a number of years.
- The volume of stimulus now in place means the economic rebound post COVID-19 is likely to be strong.
- Long-term safety of property compared to equity markets
- The banks have repeatedly said they are open for business and ready to lend meaning that property transactions will continue to occur
- The dramatic fall in the Australian dollar will be stimulatory for exporters
- People are going to have a lot more time on their hands over the coming weeks/months meaning they will have time to research and consider their next property move
We endeavour to provide regular updates on how COVID-19 is affecting the property market. This means we need to operate at speed, often speaking to you while waiting for further announcements and clarifications from the government and other third parties.
The information and any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters.
Information in this article is correct as of the date of publication and is subject to change. Any inadvertent delay, omission or error shall not be held to relieve either party hereto from any liability which would attach to it hereunder if such delay, omission, or error had not been made, provided such omission or error is rectified as soon as possible after discovery.