As the COVID-19 situation continues to play out, we take a look at what the coming weeks and months may look like in property.
The COVID-19 outbreak presents many challenges and opportunities for the property industry. With the country nearing full lockdown and social distancing measures being enforced, it’s entirely reasonable that the preference for many Australians will be to put important decisions, such as buying or selling a house, on hold – at least until more clarity is available.
With a dip in market activity looking possible, just how far-reaching will the impacts be? The situation is rapidly evolving, and it’s understandably difficult to predict with certainty how the market will be affected –and how quickly the economy will recover when it’s able to resume full mobilisation.
Pleasingly, industry appears to have innovated and adapted swiftly, with evidence suggesting existing technology which enables digital inspection and auction may now be receiving much broader use.
Before we attempt to gaze into the crystal ball, let’s cast our eyes back to study the recent market trends, prior to COVID-19:
February market data indicated the following positive trends*:
- Annual growth in settled sales is 7.7%.
- Annual growth in dwelling values was 6.1% nationally, 10.7% in Melbourne and 10.9% in Sydney.
- Annual dwelling values increased in six of the eight capital city markets.
- Melbourne, Brisbane, Adelaide, Hobart and ACT dwelling values were at a record high.
- Monthly sales activity was up 7.7% annually, including 8.9% in Melbourne and 20.7% in Sydney.
There’s cause for optimism when considering this data. It’s clear that while the current circumstances are exceptional, the market has established a strong position over recent months, which may help to mitigate the COVID-19 downturn.
A strong response
Nationally, the steps taken to protect the economy and workforce have been significant.
In addition to the numerous positive initiatives being undertaken by banks and other lenders for existing customers, the Federal Government has announced a sizeable three-tiered stimulus package worth $213.6bn.
Key points include**:
- $4.76bn for $750 payments to welfare recipients and $6.7bn for businesses for wage subsidies.
- $90bn three-year funding facility to help banks continue to lend to business, with $15bn committed to smaller banks and non-authorised deposit-taking institution lenders.
- $66bn including a $550 corona virus addition to jobseeker payments and a second $750 payment to welfare recipients.
- $1,500 fortnightly ‘job-keeper’ payment for employers to pass on to employees to help retain staff and extending eligibility for jobseeker payments.
- More flexibility around retirees on drawing down on their superannuation and increasing cash payments to SMEs (small and medium enterprises).
These endeavours will help support Australians and inject cash into the economy – and there are silver linings as a result. For those in stable financial positions, the rate cuts will encourage consumers to seek to refinance or get a better deal from their existing lender.
With open inspections and auctions paused for the foreseeable future and a myriad of other factors in play, it would be realistic to assume there will be a reduction in properties listed and potentially sold over the next quarter. However, traditionally the property market is not as volatile as other markets such as the stock exchange – residential property is Australia’s most valuable asset class at $7.1 trillion* and it should not be affected as dramatically as other sectors. History shows that no matter what the situation, people still need to buy and sell homes.
As we move through the months ahead a clearer picture will be painted – but for now, industry can take confidence in its strong foundations and capacity to adapt to digital and technological solutions, with property settlements notably proceeding uninterrupted and in full capacity.