Real estate industry must adapt to COVID-19 enforced changes
The real estate industry is now adapting to social distancing policies that will affect open houses and auctions.
Property auctions have been banned in a bid to curb the spread of coronavirus.
Open house inspections have also been restricted, with the government giving no indication as to when they may resume.
“Real estate auctions and open house inspections … that cannot continue,” Mr Morrison said in a recent announcement.
The impact will be known in the coming weeks, however the industry is ready for change with agents already conducting online bidding services and virtual property tours.
“We have to adapt,” said Ray White TRG principal Gavin Rubinstein.
“We can do one-on-one inspections, buyers can still bid in virtual online auctions and we’ll be moving to more private treaty campaigns.
“These new challenges are really going to qualify the buyers — so we’ll be only dealing with motivated buyers and motivated sellers in smaller volumes.”
The REIWA welcomed the government’s clarification on auctions and home opens, reiterating the point that private appointments will still be permitted.
“Overall REIWA and its members support these restrictions as part of the real estate industry’s contribution to help stop the spread of coronavirus,” Mr Collins said.
“During the last few weeks, agents have already adapted the way in which they operate as we shift into an environment with far less contact, with many agents currently reducing or eliminating home opens.”
Collins has highlighted the need for people to have a roof over their heads in these times, which means the property industry must adapt and remain operational.
“Shelter is one of the most basic of human needs and the industry can manage to reduce the risk of spreading the virus, while at the same time allowing buyers and tenants to find homes,” he said.
A brave new online world
Collins said the real industry will adapt to individual appointments and telephone auctions.
“With regards to public auctions, these can still occur via telephone bidding or by using one of the many online auction platforms available.”
Some agents have already moved to online auctions fearing numbers would dwindle.
Elliott Wasserman of Realestate Redefined recently held an online auction in Sydney, saying “We made the decision for an online auction a few days ago because we were concerned some of the buyers wouldn’t show up.
“We thought ‘let’s give it a go’ … and it was seamless.”
Wasserman sold the Bellview apartment in Sydney for $970,000, $20,000 above reserve.
In Melbourne, thousands of scheduled auctions to be held over coming weeks won’t go ahead as normal.
Real Estate Industry of Victoria Leah Calnan believes Melbourne could be in for a quiet winter period.
“We’ll see some adjustments in the amount of sales that are happening,” Calnan said.
“Agents have already started working with technology and online auction platforms and they will need to continue to change their practices.”
While she does believe sales will decrease, the industry will continue to forge ahead as demand requires.
“Melbourne’s property market has been very strong (over the) past six months,” Calnan said.
“At the end of the day, some vendors will still need to sell, many need to purchase and there will be others looking to rent.”
Interestingly, the Corelogic February 2020 Home Value Index Results confirmed that nationally, housing values surged by 1.1%, with values across five of Australia’s eight capital cities reaching a record-high.
That number will readjust given the current climate. This week was set to be the busiest week of the year with 3,203 homes scheduled for auction across the combined capital cities. However, the ban on on-site auctions saw the withdrawal rate surge over the weekend, with 40 per cent of auctions pulled from the market, up from 7.5 per cent a week earlier.
This hit shouldn’t last too long if buyers and sellers come to terms with the new order of transaction.
Buyers and sellers must adapt as well
As the market softens, buyers and sellers will also be forced to make difficult decisions or find new ways of coming together.
According to CoreLogic analyst Caitlin Fono,“This week’s preliminary auction results mark a turning point in buyer and seller sentiment, with withdrawal rates rising as vendors think twice about testing the market and buyers losing confidence or choosing to avoid public gatherings.”
The real estate industry will provide methods of sale and inspection that buyers and sellers must also adapt to.
There is also the very real reality that should Australia move into a recession, prices will fall.
AMP Capital chief economist Shane Oliver believes the worst case scenario could be 10% or more unemployment “which would trip up the underlying vulnerability of the housing market around high prices and high debt levels. This could see a 20% fall in prices.”
This is worst case scenario and with banks coming to the party with a six-month repayment holiday for mortgage holders, and with the government pledging to support workers who lose their jobs, the country could be well insulated from any worst case.
Those with an interest in the property market will be watching how things unfold with more interest than normal, however the industry at large is putting in place supportive measures to ensure buyers and vendors get a fair deal.
It’s just a matter of everyone adapting to new practices, understanding current market conditions and riding out the storm.
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