Whether you’re a first home buyer, savvy investor or planning to upsize, downsize or invest, the COVID-19 coronavirus will have cast a grey cloud of uncertainty over those beautifully curated plans right now.
So what should you do?
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Lloyd Edge is the Director and Founder of Aus Property Professionals, a buyer’s agent, property strategist, and author of new book Positively Geared.
Here, Llyod shares his insights into how the COVID-19 coronavirus will impact the housing market, and the opportunities it may present for savvy investors, first-home buyers and more…
Q. What opportunities will the housing market shake-up present?
A. I believe the good opportunities will now come as there will be less buyers and no open home inspections. So everyone needs to have private inspections. This also means online auctions and potentially better chances of securing properties via private treaty offers rather than the pressure of auctions.
Q. If there’s buyers, will this affect prices?
A. While there will be less buyers in the market, I think there will be less properties listed. This shortage of supply should also keep house prices up a bit, avoiding a crash like many are expecting. I am not concerned.
Q. What happens if the market crashes?
A. If the markets decrease in price, this can present some excellent buying opportunities. It will help those who have limited budgets, and also still have secure incomes. This can create a good opporuntity for first home buyers. The market will bounce back.
Additionally, the Federal Government’s financial stimulus package and pressure for flexibility from the banks during the coronavirus pandemic will only help to cushion the property markets during this time.
I am expecting to see a reduction in activity in the property markets, particularly from vendors withholding supply which will only help support property prices. I am not expecting prices to plummet as we are still going to have demand from buyers.
There will be so many opportunities being presented for savvy investors.
Q. How will the traditional house-seller-buyer exchange play out?
A. To limit the number of buyers inspecting a property, selling agents will be offering a lot of properties to buyers’ agents first so they can access their client base as well as access people who are ready to buy. Buyers’ agents will prove to be a critical resource during this period as they understand their clients needs and will only present a property which meets their client’s criteria.
Q. How will a crisis like Covid-19 affect the behaviour of buyers?
A. With restrictions placed on open homes, real estate agents already have properties ready for ‘virtual inspections’ and agents will physically show serious buyers through the property by appointment only. This is in order to protect the health of the community, but also does not prevent a purchaser from inspecting any property they wish to purchase.
I think many people who are in the markert to buy their own home might decide to wait as they prefer to stay at home and not risk being infected by the virus. They will probably decide they can hold off until later in the year, and probably hope for more of a price reduction as well.
Q. What about savvy investors?
A. We should start to see a few savvy investors come out who are just looking for a bargain based on the numbers. Investors are not emotional when it comes to the property and some may view property just by virtual inspection and then place an offer, whereas home buyers will want to walk through the property and get a good feel for it – something they might hold back on for now.
Q. How will sellers be affected by the pandemic?
A. With the ban on public auctions real estate agents will be taking advantage of going online and performing live auctions through the internet. Many vendors will change their tactic and are now choosing to sell by private negotiation rather than through an auction campaign.
Many vendors will hold off if they don’t have to sell their property at the moment. The economic uncertainty, less buyers in the market and a different way of selling potentially means reduced sales prices. We will probably see vendors holding off to see if market conditions improve post COVID-19, hopefully later in the year.
Q. Some sellers need to sell their house, despite the unstable market…
A. If they have to sell their house, I believe now is not really the right time for them. It would be prudent for home owners to contact their banks and ask for their mortgages to be put on hold or to have their loans converted temporarily from Principal and Interest to Interest only.
If they want to sell for other reasons I think they need to ‘interview’ a few real estate agents and find out what strategies those agents wil employ to be able to sell the property in this current market. It might be a matter of the agent having some contacts of people who might be looking for that kind of property.
Q. What about people who need to buy right now – because they have a baby on arrival, or similar?
A. I think in this period more than ever, a buyers’ agent will prove very handy. Buyers’ agents have a lot of good contacts with real estate agents. To limit the number of buyers inspecting a property, selling agents will be offering a lot of properties to buyers’ agents first so they can access their client base as well as access people who are ready to buy. I get calls from real estate agents everyday asking if I have clients who I can match up for properties they might be selling. With no more open home inspections, less properties listed, now is the time to have a buyers’ agent find you a proepty that exactly matches your brief as there will be more and more properties sold off market.
Q. Some experts warn the property market will drop by 20%. What is your forecast?
A. I think the Federal Government’s financial stimulus package and pressure for flexibility from the banks during the coronavirus pandemic will only help to cushion the property market during this time.
I am expecting to see a reduction in activity in the property market, particularly from vendors withholding supply which will only help support property prices.
There are several micro markets within the property market. For example even Sydney has many different markets and the rates in which they grow and fall will be different depending on circumstances, including employment and the rental population in various areas.
Q. What does market recovery look like? Future predictions
A. We haven’t seen any real change in prices yet but the next couple of months should see a relaxing in house prices. We need that to occur before recovery. I think the markets will really start to pick up towards the end of the year and we will be in a strong growth faze in the first quarter of 2021.
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