As Australians, we love our real estate.
The family home is one of our most treasured possessions; a place to build our lives, raise families, and create fond memories. However, the Coronavirus pandemic has had a significant effect, not just on Australia's economy but also upon our future plans and the way we think about where we want to live.
Since March, much has changed.
During the country's first lockdown, many Australians lost their jobs, more Australians began working from home, workplaces gained flexibility, and with more time at home to think about what's important in life, many of us started thinking about what life might be like if we left the city for that tree change or sea change we've long talked about. Others have decided it really is time to downsize, and countless families have come to the realisation that they need more room - that putting it off can't wait.
Additionally, thousands of first home buyers, buoyed by the Morrison Government's $25,000 HomeBuilder grant, determined that now is the time to take their first steps on the property ladder. This has all added up to thousands of Australians seeing the Sea Change or Tree Change we'd considered as something further off in the future as something we should act upon now.
While homeowners were reluctant to sell in April and May, First National members saw buyer demand bounce back strongly through both months, particularly across regional Australia. In fact, some of our estate agents in regional Victoria recorded levels of transactions exceeding the best months they'd experienced in the past 20 years.
Pre-sale activity from homeowners also reflects rising confidence that the worst pandemic predictions of economists back in March look increasingly unlikely to be realised. Then, the big four banks were predicting house price declines of between 10 and 30 per cent, which they have all since been walked-back.
April housing data showed a rise in average house prices nationally of 0.3%, followed by a fall of 0.4% across May and a further 0.7% in June. Despite these incremental falls in prices, home prices in affordable prices ranges in fact increased across the country, with most of the declines having been realised at the top end of Sydney and Melbourne's prestige property markets.
In annual terms (at the time of writing), six of our eight capital cities still have house prices higher than a year ago - Sydney, Melbourne, Brisbane, Adelaide, Hobart and Canberra. Only Darwin and Perth have lost ground, by 1.5% and 2.5% respectively.
CoreLogic data reveals the pre-listing activity of real estate agents is on the rise, nationally - suggesting more property will be available for purchase come spring. This aligns with recent data from removalists indicating Australians are interested in leaving COVID hotspots and moving to regional areas; acting upon long held desires for a Sea Change or Tree Change. In some cases, the motivation is driven by job losses or downsizing of businesses, but a majority is being driven by a simple desire for a smaller mortgage as well as more space, independence and a better lifestyle.
Sydney is the city people most want to leave as they seek lower priced areas and improved lifestyle. Melbourne is next in line, with those seeking to leave most inclined to head to Queensland or Victoria's regions.
Prior to 2020's pandemic, regional Australia property markets had been consistently showing steady capital growth for several years. COVID-19 has served only to accelerate that trajectory, with first homebuyers seizing the opportunity Federal Government's $25,000 HomeBuilder Grant, families seeking a better lifestyle, and young retirees looking for better value.
Even though housing values in capital cities have demonstrated remarkable resilience, the results for regional Australia are considerably more bullish. For the June Quarter, Domain data records price rises in New South Wales, Victoria, South Australia and Tasmania - while in annual terms, there are increases in Tasmania (12%), Victoria (7%), NSW (6%), South Australia (4%), the Northern Territory (4%) and Western Australia (2%). Queensland was the only state to record an annual decrease (less than 1%).
Of course, Victoria's set-back and re-implementation of Stage 3 and 4 restrictions will dampen economic recovery and is likely to amplify some further declines in home prices over the coming months. That, however, will likely only serve to strengthen the desire for change, when change is possible.
Apart from areas that are heavily reliant on international tourism, most regional economies are travelling quite well and some are thriving, thanks to components of the local employment sector. Agriculture, viticulture, mining, medical services and food services are amongst sectors doing quite well, thus far.
The desire for a more affordable lifestyle is not a new trend; it has simply been strengthened by the effects of COVID-19. Regional areas within a two-hour radius of capital cities are anticipated to see the greatest increase in buyer demand, as people trade city homes for less expensive locations within easy reach.
Supply has been historically low for the past 3 months, which has helped underpin the resilience of the market nationally. With real estate, it's all about position and presentation - but also the laws of supply and demand. When demand exceeds supply, houses maximise their value and sell quickly.
As we said earlier, housing markets have remained remarkably resilient through the COVID-19 crisis. The national index has fallen 1.6% since April's high, and turnover of homes has recovered quickly after the sharp fall in homes for sale in late March and April.
Advertised properties have remained tight, with the total number of properties for sale falling a further 4.3% in the four weeks to July 27, which is 15.2% below the number of homes for sale this time last year.
One of the big changes that is the result of COVID-19 is that online buyer activity is now 15% higher than this time last year, according to both realestate.com.au and Domain - two of Australia's largest property portals. This provides still further indications of the underlying strength of the marketplace.
Looking at prices across Australia's capital cities as of the week ending 9 August 2020, the table below show's CoreLogic's median price data for apartments and houses.
Time on Market (TOM) as well as how much a vendor discounts their price are two other indicators that agents use to measure the health of the marketplace. The level of discounting is chiefly within normal expectations, and TOM in many locations is less than normal. In other words, houses are selling faster than they normally do.
When it comes to comparing your purchasing power in the country, compared to the city, CoreLogic's below diagram separates houses from units, and capital city medians from 'rest of state regions' - which represents the collective median price of regional properties throughout your state or territory.
What might the spring market look like?
Many Australians expressed concern between March and May that the economy would 'fall off a cliff' in September when the Morrison Government's JobKeeper and JobSeeker support packages were due to end, both initiatives have been extended. This, as well as bespoke policy settings such as the HomeBuilder extension for Victorians, has helped instil confidence that the federal government intends doing everything possible to minimise the economic impacts of COVID-19.
First National Real Estate anticipates that the current supply trajectory suggests there will be more property coming onto the market in spring and, while this could dilute demand somewhat, general confidence in the national property market as well as the strength of motivation to activate future plans, suggests any increase in housing supply will be met with strong rates of absorption.
The agents that seize hold of every possible advantage will be the ones holding the tiger by the tail as markets normalise.
Let's make sure that's you!
Talk to your Business Growth Manager to assure you are using every available tool to take market share.