Channel 7 Sunrise Discusses the COVID-19 Real Estate Property Dilemma
Property Update on Channel 7 Sunrise on 20 August 2020 – Shaun White
Is it a good time to buy, sell or sit tight in real estate?
Channel 7 Sunrise discusses the COVID-19 real estate property dilemma. Based on this brief report above on the property market during COVID-19, many points were raised. However I would like to add a few extra comments. As a Buyers Agent in Melbourne, we always take property transactions very methodically and consider all the pro’s and con’s before acting.
Now more than ever, each situation needs to be examined and fleshed out before anyone actions a property purchase or sale. I believe this will be the case for the next 12 months.
Consumer Sentiment
Property buyers and sellers are understandably emotional at the moment under the various pressures that COVID-19 has added to the real estate space. Will I source funds for a loan, will that change going forward, is my job secure, can I afford what I need, am I reacting to present circumstances without a plan?
My advice for right now is to do your research and don’t rush or panic. Professional advice is on offer from Buyer Solutions and we have staff with experience in both local Victorian and global financial challenges from the last 30 years.
Some people are desperate to sell, others are desperate to buy, others are just confused.
Property Pandemic Decisions
Sharing some of our clients’ decisions since February 2020 may help. Property buyers and sellers have been active during various stages of lockdown. Eliminating the mortgage and becoming debt free is one motivation. Upsizing to gain more space is another. Perhaps downsizing to get out of a share house. Alternatively, moving to be closer to family or to provide care for a loved one. First home buying in a weaker market to avoid auctions, access grants and housing schemes. There are many reasons and considerations triggered by COVID-19.
Interestingly, there are also many Australians who have been based overseas repatriating home. It’s not easy for them during this pandemic, but the majority are choosing to return to Australia for family and lifestyle reasons.
Some buyers who already have a loan approved have a strong sense of urgency as they are not sure if a future loan will be approved. The banks are tightening lending protocols and some property buyers think that with historically low interest rates of between 2.9% and say 3.8% that it is a good time to buy now.
Property Mistakes and Traps
If you don’t take a long-term view to property, you may rush, fail to plan and make a costly mistake.
I am well known for pointing out to Buyer Solutions clients that to buy, sell and rebuy will cost property owners over 13% of the transaction value and more if the market bounces back.
In Melbourne, (unless you are an exempt first home buyer), stamp duty is 5.5% of the price of the property. So, when you get it wrong that is 11% to the State Revenue Office. Plus you will have real estate sales agent costs of between 1.65% and typically 3% plus marketing costs.
Please, be prepared to slow down and buy the right property for you. As Buyers Agents, when we need to move fast, we can. Our team of professionals can help you get the property purchase right and manage the project so that it can be an enjoyable experience.
On your own, you may not have the help, resources or support to resist acting recklessly with consequences later on. Please don’t let COVID-19 or any person involved in the real estate transaction push you around.
Prices During COVID-19
Prices could and may well go down over the next six to 12 months. Some asset classes are holding up well at the moment, however many sectors are showing signs of stress.
Off the plan purchases made months or years ago are in real jeopardy with bank valuations coming back less than what buyers have paid for the property. This is very stressful for the buyers who may be on Job Keeper or Job Seeker now, with vastly altered financial stresses to when they bought.
You cannot generalise or predict across the entire market. Houses may be going well in some suburbs or parts of suburbs and apartment prices may be falling in COVID-19 infected buildings and high density settings at the moment.
Even researching on past sales results may not help provide an accurate property value. You need to protect yourself or have a professional, experienced Buyers Agent find out for you.
Stage 4 Lockdown in Melbourne
As a Melbournian, I envy the rest of Australia right now. We are in Stage 4 lockdown with many businesses, including real estate, closed and/or working from home for reduced income with more stress and more work. Why do I raise this? Because Melbourne is different.
No physical property inspections are allowed till at least the 14th of September 2020. A photographer isn’t allowed to enter a vacant property.
Never before has the industry been so restricted and I believe virtual property purchases are potentially reckless. Now is the time for buyers to wait and analyse next steps for when Stage 4 is over.
What will happen when we have a vaccine?
Once a safe and effective vaccine is found and/or our society adjusts to a world with COVID-19, what will happen in the property space?
I believe some peoples’ criteria for what they want out of a property will be permanently changed by COVID-19.
I suspect there will be a desire for bigger homes, properties that provide a work from home space, access to fast and reliable internet, the ability to walk to a range of local shops, schools and facilities, less reliance on public transport, living and working regionally and from home, increase in solar power for electricity and even a desire for a vegetable patch. These property features could all be permanent aspirational changes as a direct result of this pandemic.
Finally, I would like to add that all of the above comments are intended as general information only. To organise a no-obligation, confidential professional discussion related to your circumstances, please contact us now.
Buyers Agent, Buying property, Housing Market, Janet Spencer, Overseas Buyers, Repatriate Aussies, Selling Property, State of the market
+61 39816 8555