As restrictions start to ease from the pandemic in Australia, with metropolitan Melbourne being the last major battlefield, many are wondering what the property market will look like post COVID and whether it’s a good time or not to make a real estate move. Let’s try and find some clues to understand what’s likely to happen.
The effect on economies around the world by COVID-19 has been significant and is far from over. However, like most periods of upheaval and change, there are those that are more affected than others depending on their personal situations. Clearly, if your employment or business has been negatively impacted you may be forced to make adjustments relative to the severity of your situation.
Alongside those people having to make forced or prudent adjustments are those who want to make changes to their lives. These are people who have the fortunate position of not being financially impacted by COVID but after being locked down for months, have worked out where they don’t want to be or what they want to add as an option to where they can live.
The latter situation is what is driving the coastal markets this year and will drive them over the next six months or so. In June and July this year, when Melbournians were able to inspect coastal property, we saw a significant increase in enquiry levels, inspections and sales. In fact, it was our busiest June and July in the history of our company and we conducted regular auctions via Zoom as many properties attracted multiple interested parties. We expect this to be the same when the Melbourne lockdown ends and in fact, we know it will be because of the number of requests we are getting for Zoom and FaceTime inspections at present.
Talking with many of these potential buyers, many had planned to make a property move on the coast in the next three, four or five years but have now escalated their plans forward so that they have somewhere to escape to out of Melbourne. Many plan to make their permanent place of residence outside of Melbourne and downsize in the metropolitan area. Underwriting the ability to make this move for many is the newfound option to work remotely, either part time or full time, with their employers blessing. This is the one significant, positive silver lining that has arisen from the pandemic. Interestingly it will be driven as much by employers as it will by those who are looking for a flexible work place, as they try to drive their overheads down with their now reduced need for leased office space.
Looking in to the future to make firm predictions is always fraught with danger, however one way to look for clues is to follow the psychology of the herd and how they are likely to react to the current situation they find themselves in. As described above, we know that our very busy winter was caused by a psychological reaction by those who were locked down and who are being told to stay away from other people and are searching for space, especially a safe space. The fact that Melbourne is being locked down longer than regional Victoria only emphasises this.
We know therefore that spring and summer will be very busy as the pent up demand from Melbourne buyers is released. Therefore, if you are planning to sell a coastal property in this period your timing could simply not be better. Timing in real estate can be a powerful mechanism and doesn’t always line up the way you would like. However, the current shortage of available properties for sale will see increased competition for properties in these warmer months and therefore the opportunity for a maximum result.
How long this psychological reaction and pent up demand will last for is very hard to judge. A possible inflection point for sentiment will be at the end of the Jobkeeper scheme in April. Those that are looking to buy on the coast may not be directly affected by this as many are essentially asset swapping, however the media will have a field day with their usual predictions of impending doom and this may make some potential buyers sit on their hands and take a wait and see attitude which often happens in periods of uncertainty.
We know there are agents in Melbourne who are advising their clients that if you are planning a move that it may be prudent to act between the end of lockdown and before Jobkeeper finishes, due to the uncertainty of the period that will potentially follow. If the economy bounces solidly then this may not be an issue however the psychology of the herd can often become a self-fulfilling prophecy, especially with the ever-present negative bias of mainstream media. They have to find ways to keep our attention and nothing does it better than a period of possible impending doom and gloom. One helpful rule to counter this is to simply ignore any headline that has the words “could” or “may” in the title because they are often written by journalists just looking for clicks to justify their existence.
A word of advice to those looking to buy this Spring or Summer is to be ready to act. We found ourselves recently in a position that we had so many buyers looking at the same properties that we had to exclude those who could not offer unconditionally. We suggest that if you are borrowing money that you ideally get pre-approval from the bank before starting your search or making an offer. It will put you in a much stronger position to negotiate. Banks are often taking up to 21 days to approve finance and this is a length of time that many vendors will not unnecessarily tolerate if they have another unconditional option.
We hope you found this Great Ocean Report informative and if we can be of any assistance with any real estate matter please do not hesitate to contact Great Ocean Properties.