How is COVID19 impacting property?

Last month started with a lot of reports from China. News of quarantining, cities being shut down and talk about where this virus originated. One month later, it was in our country, spreading around Europe, Iran and South Korea at pace, but still not really at the forefront of most Aussie’s minds.

When our supermarket shelves were stripped of toilet paper, we started wondering how serious this could get.

Now that the World Heath Organisation has declared that we have a pandemic on our hands, and in the wake of stock market fallout, hysteria over toilet paper, hand sanitiser and dried food staples, (seemingly in that order) buyers are naturally asking what they can anticipate for the property market.

I’ve had so many countless questions, yet as the news evolves and the fears escalate, my answers to every buyer’s concerns must be considered and must take into account the impact on self-isolation, business-discontinuity within our community, and all of the firm short-term measures we’re all about to take.

A sobering moment for me came on Friday when a friend and corporate senior employee described their internal business continuity risk mitigation approach. He’s on the blue team.

Blue team come into the office on Mondays, Wednesdays and Fridays.

The green team, on the other hand come in on Tuesdays and Thursdays. Cleaning crews come in every night to apply serious disinfectant on desks, door handles, lift buttons,.. the list goes on.

There is no doubt this contagion will have an impact. But the questions are;

• Which buyers will change their course?, and
• How long will this thing last?

I can certainly start to answer the first question. In 72 hours we have had a change within our current client list.

The ratio seems to be 30:50:20

Around thirty per cent of current clients are proceeding with gusto. It’s fair to say that they are mostly owner-occupiers.

Fifty per cent have asked questions, talked through their fears, weighed up external information and decided to press on ahead. This includes a blend of investors and owner-occupiers.

Twenty per cent have placed their search on hold. Of these buyers, they are each investors.

What is interesting though is vendor behaviour. It is early days, but out in the field today I gleaned some interesting information.

While bidding at this beauty in Ascot Vale, (against three other buyers) I got a chance to chat with the agents before the auction bell rang.

They each reported that they’d had vendors decide to delay their campaigns until this pandemic either clears up or gives us some clarity. One agent had a vendor cancellation for an auction today.

Based on my experience in the field today, this could have been an overreaction, or at least a premature one. Had their auction proceeded like others I was privy to, they may have achieved a pleasing result.

My second auction raced past my pre-COVID19-pandemic appraised value by a huge margin. This 600sqm block in Cheltenham’s Golden Triangle offering a nicely presented 2BR weatherboard house sold for over 15% above reserve, and had what could almost be described as irrational bidder behaviour shaping this amazing outcome.

The obvious remaining question circles back to, “how long will this last?” A thought-provoking article, and one that considers past pandemics is this one from Propertyology. It was released prior to the announcement of pandemic status and without doubt, Simon Pressley will be researching the impact on our property markets and sharing valuable updates as we navigate this novel situation we find ourselves in.

Opportunistic buyers are indeed out there, and in the past three days we have had two clients decide to commence a search with us in an effort buy advantageously if the opportunity swings in their favour. An industry colleague in Canberra penned a thoughtful article about the potential opportunity for those who are discerning.

The questions I haven’t been asked are the questions I’d be asking as a consumer if I was buying;

• What will be the impact of reduced interest rates?, and
• What will the market place feel like if vendors opt out or put their sales campaigns on hold?

Without wanting to dilute the importance of buyer concern around this virus, we also have to consider what the conditions could be for those who are committed to buying, (more than likely, owner-occupiers).

Shelter is a basic human need, and this can feel critical for some.

If vendor numbers contract, if buyer power increases, and if certain buyers are dedicated to their property acquisition, we have to consider the possibility of a price surge for some dwelling types.

Just a thought…..

I’d like to credit my REBAA, (Real Estate Buyers Agent’s Association) friends for their ability to support, inform and share valuable insights with each other. Late night chats, texts, article comments and insights are commonplace for us all. What a village I have. 🙂