Many are asking us how will coronavirus hit the property market in Melbourne. Naturally, the current circumstances are unlike anything we’ve witnessed in our lifetime, let alone in our combined 40 years of real estate experience.
We feel for the many people who are suffering
Healthcare staff working tirelessly to help the ill. People who’ve been forced to shut their business and layoff staff. Those who’ve lost their jobs. It’s an incredibly difficult time for us as a nation to face this global challenge.
Coronavirus and the Melbourne property market
Just when the market was showing signs of growth, we’re whacked with a global pandemic and subsequent economic fallout. The coronavirus hit us all hard and fast. We have seen an initial frenzy of activity in March followed by a sudden halt. The new world consists of virtual auctions and single private appointments to view properties. We are still here to help people sell and buy homes in Melbourne. Today we’re sharing our take on the impact on the market and what you should do if you are considering selling or buying in 2020.
What’s happening in the property industry?
This is a market that takes time to react to economic change. Opinions are mixed. Some analysts are predicting a market drop of 20%. Economic factors alone are challenging. Plus, there’s now added difficulty of bans on public auctions and open for inspections and strict social distancing measures that make even private home inspections difficult. On the other hand, the government’s stimulus measures and low interest rates could make it a prime time for investment and a chance to secure a property at a good price.
Safe as houses
Historically, in times of economic uncertainty, people who are able to invest choose property over other more liquid investment options. The stock market is too volatile at present. Even though many are suffering surprise unemployment or business challenges, investors with secure employment or finances might see this as an opportunity to secure property. Opportunists out there will likely choose property as their safest option.
Should I sell my home now?
If you were planning to sell in 2020, then please wait and see what transpires over the next month. Circumstances are changing on a daily basis. We can never predict the state of the market in six weeks (which is the minimum time from start of a campaign to sale).
The enormity of job losses combined with restrictions to how we go about real estate transactions cause too much uncertainty. It’s a big gamble to commit thousands of dollars to an advertising campaign in the coming weeks. We believe that inevitably, the market will slow down.
However, every property and personal circumstance is unique. We recommend you contact us for a complimentary planning session so we can give you advice based on your particular situation.
Why would you consider selling now?
With so much economic pressure, house prices may suffer. What if you have already committed and your property is already on the market? What if you have already paid for your marketing? By selling now if the price is right, you are more likely to be at the highest price that the market will see for 2020.
If you are not in a rush to sell
Then, stay where you are. If you can afford to, wait out the market volatility. We cannot put a timeline on this as it is a daily proposition right now. It all depends on your unique circumstances and your property goals for the future.
Should I buy a home now?
If you’re looking to buy, your challenge will be the lack of properties on the market. Many homeowners will sit tight, if they can. There will also be some buyers waiting for prices to fall or securing their own employment. Fewer homes on the market can lead to strong competition amongst buyers for quality homes. However, we don’t know how buyer sentiment will be affected yet. The worst mistake you can make is to buy the wrong property because it was the only thing you could get.
Buying a home now also depends on:
- skillfully negotiating the new rules and way of purchasing
- being able to read the agents
- understanding how the new process works and using it to your advantage
- knowing where the market actually stands and not listening to what the agent tells you.
Please do not purchase if you have a current home to sell first.
More than ever, this advice is critical.
Downsizers – If you have recently sold or are on the market now you should be in a reasonable position to start working hard to find the right smaller home over the coming months. If you have not yet sold and are able to hold then do. In a down-turning market, you will be more affected than an upsizer. (For example, 10% off $2m is $200k when you are selling. But 10% off $1m when you are buying is $100k so you could potentially be behind).
Upsizers – you can take advantage of falling prices to secure a larger home, however, your own home will also suffer from price pressure but as explained above, it should be to your advantage.
First home buyers – there may still be competition in the market at the $500 k – $1 million price point. Don’t get frustrated by lack of stock and buy the wrong property. We say it so often, but it is not a race – you cannot get this first one wrong. This first home purchase is what sets you up to take advantage of potential long-term gains.
The impact of job losses
Sadly, people who’ve lost jobs may be forced to sell property to free up cash. That tends to be the last measure people take, so this won’t happen for many months yet, possibly coinciding with spring, when typically more homes are on the market.
Pressure on agents
With fewer homes on the market to sell, agents compete hard for your listing. So, if you indicate an interest in selling, expect plenty of pressure, daily phone calls and ambitious price quotes to win your listing. Some vendors find this quite stressful. (Another benefit of using property advocates is we deal with agents on your behalf.)
Agents are also under pressure because rental income may be impacted with rental support government packages, leaving agents without vital rental income. With the challenges of selling homes while complying with social distancing measures, it’s a tough time for agents at present.
What about investors?
Some investors will also be facing the pressure and may need to sell property. As mentioned, others will turn to property after getting burned by the stock market. It’s difficult to give general advice to investors because so many variable factors are involved. Please contact us for a complimentary one-hour consultation.