COVID-19 restrictions are lifting: Will the housing market now recover?
There were only 79 auctions in Melbourne this weekend and just over half found a buyer, as on-site auctions made their official comeback. The overall clearance rate in Melbourne was 70 per cent.
The easing of restrictions herald positive signs for the market.
Although we are a long way from the 358 auctions held in May 2019, the resumption of live auctions and the positive results shown throughout the Melbourne market, is a step in the right direction.
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In Glen Waverley, there were promising signs with one particular house not only selling over $100,000 above reserve, but 10 participants (the maximum amount allowed to attend a live auction) also registering their interest.
lar house not only selling over $100,000 above reserve, but 10 participants (the maximum amount allowed to attend a live auction) also registering their interest.
A further 24 people are reported to have watched beyond the restricted boundaries.
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CoreLogic auctions analyst Kevin Brogan said despite the low auction volumes in Melbourne on the weekend, we could see more and more activity and confidence in the property market especially as restrictions lift further.
The property market in Sydney has been stronger than in Melbourne during the lockdown period.
There were 137 auctions scheduled in Sydney during the weekend, with a 72 per cent clearance rate. Last weekend the clearance rate in Sydney was 77 per cent.
This perhaps suggests that buyer activity remains strong.
No doubt the lifting the ban on onsite auctions and inspections will have a positive impact on property market movements, however Core Logic does warn that it may take a few weeks before we see an uplift in scheduled volumes.
What happens to online auctions?
The reintroduction of live auctions doesn’t mean we will go straight back to normal. Remote or online auctions could remain in place for as long as only 10 people are able to attend.
Online auctions now become invaluable if there is a lot of interest in a property.
If an agent has 15 registered bidders and 100 enquiries, it is the agent’s duty to the seller to solicit as many bids as possible whether that be onsite or offsite.
Online auctions could be here to stay as a way for agents to attract more bidders. They are also handy for bidders who may not be able to make it to a live auction in person.
In an online auction nobody misses out on a buying opportunity.
Digital inspections may also retain value for agents who are now provide a walk-through video or 3D tour. These tools gives potential buyers excellent perspective on the quality, size and layout of a property.
They also facilitate more qualified buyers.
Interestingly, realestate.com.au reports that following the launch of digital inspections, more than 44,000 listings now feature digital video tours. That was an increase of 96 per cent. 3D tours are up 327 per cent.
Will the market pick up?
Nobody knows for sure what the outcome will be. Unemployment and consumer confidence may still have a negative impact on buyer activity in the property market, however the signs look promising.
Once restrictions are completely lifted, analysts predict a pick-up in auction activity and clearance rates. House and land development are also expected to remain robust.
As for prices, we can expect a drop in house values. Remember, Commbank’s worst case scenario was a 32% decrease in the value of the average home.
However, it may not be as bad as people think, certainly not as bad as a 32 per cent decline, and it may not be for a sustained period.
Middle ring suburbs haver held their value and by the time more people are ready to sell in these suburbs, the market could be in recovery phase meaning we may see houses, such as those in Glen Waverley, selling well above reserve.
One final thing to consider is the low interest rate environment.
This won’t last forever, so as more houses become available and the economy picks up by degrees, it is likely that buyers will look to take advantage of fixed interest or variable interest home loans.
Ideally, you should be pre-approved for a loan before making a buying decision.
There are factors working for and against a property market recovery, but with restrictions easing, live auctions now available again and low interest rates remaining for the foreseeable future, a recovery could come quicker than expected.