There is a lot of uncertainty in the residential and commercial property markets at present. Kim Ball answers some of the questions we at Rose & Jones are being asked on a daily basis.
The auction clearance rate was 76% on Saturday. Is the market back to normal?
It is true that historically the auction clearance rate has been closely correlated to house prices – regardless of the number of properties being sold at auction.
However there are so many unique and new factors currently influencing buyer and vendor behaviour that we can not say a high clearance rate means prices are rising.
Rising unemployment, lower household incomes, and non-existent immigration will all affect property prices – but these effects are yet to be felt.
Yes, there are a lot of buyers at open inspections, however let’s wait and see if this translates into actual transactions and at what kind of price level.
On Saturday I inspected 8 properties for clients and there were far less people inspecting than the previous 2 weekends. The sign of a slowdown, or just cold weather?! One thing is for certain – if you are a serious buyer you will be inspecting properties regardless of the weather.
Are prices falling? What discount can I expect to get when I buy a property?
In the past 6 weeks I have achieved substantial discounts to pre-Covid prices on properties that I have purchased for clients.
The start of 2020 saw a rising property market. Buyers were keen, and there was limited stock on market, which fuelled the market.
The economic data is not available yet but I suspect we will see property prices falling from the rising market experienced at the start of this year.
In terms of what discount you should expect – this will depend on the property, location, the vendors and buyers’ circumstances, and your negotiation skills! Although there are economists predicting falls of 10% (and more) in the Sydney market, this headline figure will not be experienced by all properties in all suburbs. Good properties in prime locations will experience less volatility.
If you think that prices will fall in the next 6 months, why wouldn’t I wait 6 months to buy a property?
Firstly, no-one knows what will happen! I suspect prices will fall but I don’t actually know. And nor does anyone else. There are a lot of people with a lot of educated opinions on what will happen to the property market. But let us remember here, this has never happened before and therefore no-one knows how it will all turn out.
The property market is heavily influenced by consumer sentiment. And this is erratic – it doesn’t take too many negative headlines in the media for sentiment to take a fall.
We are very lucky, so far, in Australia. Good governance and leadership, excellent healthcare, and public adherence to social distancing rules seems to have things under control. But we all know this could change quickly with a second wave of infections, or the continuing hardships and suffering being experienced in other countries.
Secondly, if you find the perfect property now – you should buy it now! It may not be available in 6 months’ time; another buyer may purchase it, the vendors’ circumstances may change. In any search, there may only be a handful of properties that are in your ideal location, with the attributes you are looking for. Say properties trade every 10 years, of this handful of properties only 1 may be for sale this year. Jump on the opportunity. But do factor in a short term price retraction in your analysis of property value.
How are open inspections being run to ensure adherence to social distancing rules?
Agents have put in place a number of measures to follow social distancing rules e.g. the over zealous application of hand sanitiser on entering a property, restricting the numbers of people inspecting a property at any one time.
I would use common sense on this one. For smaller apartments, it does not take many buyers inspecting and walking round a property at the same time for the 1.5m rule to be broken easily. If you are nervous at all or immune-compromised I would not attend open inspections and instead request a private inspection. Good agents will be more than happy to do this for you.