COVID-19 and the Property Market: #choosewhoyoulistento

We’ve had many clients, past clients, industry colleagues and consumers reaching out to us to ask about our current market experiences and our thoughts on how this COVID-19 pandemic could impact the property market.

None of us know how long this will last, but what we do know is that our RBA has taken unprecedented steps to reduce rates to historically low levels, (see the announcement here) and our government has already issued various stimulus packages for households and small business, and recent statements suggest that further stimulus and relief will follow.

“A three-year $90 billion fund for banks to help small- and medium-sized businesses will be established, while the government will give $15 billion to small lenders.

“Mr Frydenberg wants bank loans to help businesses pay rent, wages and utilities bills.”

“We want them to be able to meet the fixed costs, whether it is the rent, the energy bills, the water bills or indeed their wages bills which will continue to need to be paid even though customers are not coming through the door,” he said.

“There will be the other side to this and we are building the bridge to recovery.”

He said the government’s second package would not look at structural changes which can’t be removed after the crisis is over.

“Our focus is on targeted measures using the existing tax and transfer system and making it as simple and as easy as possible for Australians to get that support,” the treasurer told the ABC,” (full article here)

‘Claim now, ask questions later’

“We could support these groups via the welfare system, offering broad-based “claim now, ask questions later” access to Newstart-level insurance payments for anyone not working.”

And this informative article articulates the demand shock and the supply shock effects well. The positive impact of Targeted Stimulus and Debt Holidays are outlined also.

“The Government has flagged a “targeted”, “measured” and “scalable” plan to stimulate the economy.”

Another interesting ABC article followed more recently.

“A less targeted (and therefore more expensive) but far easier and faster approach would be to give means-tested cash payments to all working households during the worst months of the crisis.

For example, the Government could give payments at the Newstart rate of $1,200 a month to all employees with incomes less than a threshold of, say, $100,000 last financial year, covering nearly 10 million workers.

This would cost about $12 billion a month, or 7 per cent of Australia’s monthly GDP. But it would be the best way to ensure that working households get timely support to manage the hit to their income.

Fast-tracking early access to superannuation or offering HECS-style loans to workers could help ‘top up’ the safety net for those who need extra cash to stay afloat.

These policies are bold, but they need to be.

The Government has shown it will take the necessary steps to manage an unprecedented health crisis. Let’s hope it is willing to do the same for the unfolding economic one.”

We have been collating some on-the-ground reports, blogs and articles penned by other industry professionals for our COVID-19 information repository.

I penned this article earlier in the week for API on the potential impacts on our market from where we stand currently.

Finder interviewed a collection of us, and REA shared Cate’s observations alongside REA’s economist, Nerrida Consibee’s earlier in the week.

As at the start of this week, (just days after COVID-19 was declared a pandemic), buyer activity on currently listed properties seemed to heighten.

This is in contrast to what we’d have expected.

Industry colleagues, both interstate and locally are finding the same thing. Auctions are being bought forward, buyers are making generous offers prior to auction, and any vendor discounting is being overruled by competing buyers’ willingness to push the resultant prices to the levels at, (or above) vendors’ initial expectations pre-pandemic.

Simon Pressley from Propertyology prepared this video earlier in the week. People may agree or disagree with it, but Simon certainly explains his position will in relation to investor behaviour, market recoveries and the difference between sharemarkets and the property market.

Sydney Buyer’s Agent, Veronica Morgan penned this thoughtful blog earlier in the week also.

Canberra Buyer’s Agent, Claire Corby’s earlier blog from last weekend takes into account the market conditions we found ourselves in at the onset of the pandemic announcement.

We will do our best to keep up to date with relevant articles and informative updates.