Despite predictions from self-proclaimed property experts about the negative impact of COVID on the Australian property markets, the opposite has eventuated and we have never been busier. So, what is going on? Let’s take a look.
There are two main themes to be examined when trying to demystify what is currently happening. The first one is psychological and the second is environmental.
From a psychological perspective, it is very clear that many people, during the lockdown period, have had time to think about what they want in their lives and what they don’t want. When you have a random event like COVID 19 occur, it allows you to highlight and prioritise what is important to you rather than continually putting it off until “the timing is right”.
For many, the idea of escaping the city, for example, was always a dream that they would one day get to. If you have that predisposition and all of a sudden you are locked in an urban environment for months on end, you not only have time to think about it, but you also want what you can’t have even more. So, when restrictions were eased, buyers came out of the blocks in force, many deciding to escalate their plan from “one day” to here and now.
Even in the metropolitan markets, the pent-up demand for a change is very evident as people work out what is wrong with the property they have been confined to and what they now need or want. If that doesn’t mean a sale, it often means a renovation. Bunnings has never been busier.
From an environmental perspective (we are not talking about climate change), we mean the factors that allow those who want to make a move the ability, confidence and willingness to do so.
Firstly, money is very cheap and will stay that way for an extended period to assist in the COVID recovery. The RBA has made this clear and with a current cash rate of just 0.1 per cent, we are at historic low settings. A clear forward trend is an excellent platform to act from. Also, the banks are very keen to lend money as part of their COVID recovery, and this has been assisted by the recent relaxation of the responsible lending laws by the federal government, which will help speed up the lending application process.
Secondly, working via Zoom has changed everything. One of the greatest outcomes of the pandemic has been the death of the “bums on seats” mentality, through necessity, by employers who now realise their companies can just be as productive with some degree of remote working. Not only that, they have now realised that they need less office space and they now have an opportunity to reduce overheads and increase profitability. Zoom is not great for culture and it’s not great for training, but does give employees and even business owners a degree of flexibility in regard to work location.
Many of the region’s towns are benefiting greatly from this as people choose to move out of the city and still stay employed. This includes permanent movers and part time lifestyle seekers who are now thinking they could have three- to four-day breaks, working remotely some days. This is a powerful justification for owning a coastal or country property that is still commuting distance to Melbourne if needed. For many, it’s a chance to buy their first home at a dramatic discount from Melbourne prices.
Thirdly, government stimulus in the form of the Jobkeeper and Homebuilder schemes have put many people, businesses and the economy itself, in good position to respond positively to life post-COVID. GDP in the September quarter grew by 3.3 per cent, which is clearly a figure that will help inspire confidence in those who want to make a property move. Again, a positive upward trend from the previous difficult quarter.
All these things contribute to an environment where property transactions can willingly occur. A psychological element that we have spoken about many times in this report is that humans are social animals and like to follow the herd. “Everyone does what everyone else does” is a proven maxim and that is what we are seeing right now. This phenomenon peaks when FOMO (Fear Of Missing Out) creeps into the buyer’s psyche and we are certainly seeing some of that now as available stock levels of property for sale remains tight.
This is a great time for property owners to be selling, especially those who are not trading in the same market. By this we mean those who are selling property assets but not needing to buy. We see this regularly in our geographic areas with the sales of underused beach houses. This includes owners who have aged and finding a second property too much to look after (despite their kids saying they will do it!) or those whose families are just no longer using the family beach house because they have moved in another direction. Family chapters open and close, as does the ownership of a beach house. If you are in this situation, you simply could not get a better time to sell, as many of our vendors will attest to. We are conducting private Zoom auctions on most properties at present and this is the product of the depth of buyers in the market place.
We hope you found this Great Ocean Report informative, and if we can ever be of any assistance in any real estate matter, please do not hesitate to contact us.