Corona Virus and Real Estate: Why prices won't go into free fall!
Corona Virus and Real Estate: Why Prices won't go into free fall
First up, according to a new update released by realestate.com.au, this crisis will be comparatively short-lived.
Secondly, our banking system is being supported in numerous ways by government to ensure it doesn’t become distressed. In addition, the Australian Banking Association has mandated six-month loan deferrals for virus-hit small to medium-sized businesses to ensure they can stay on track. Plus, the Big Four banks and some other financial institutions are offering up to six-month loan holidays for their home loan customers.
These and a range of other measures are designed to hold off distressed sales that would otherwise occur far more quickly. This means that house prices will fall in the short-term because of decreasing demand, but don’t expect to see them nose-dive.
Thirdly, unemployment will only hit some sectors so not everybody will be impacted. Tourism, entertainment and hospitality sectors have shut down, and realestate.com.au says they are seeing the fallout from this with rising rental listings. However, they have also seen an increase in search activity across the board on the Buy section of their site compared to the same period last year.
"an increase in search activity across the board"
Many sectors are facing really tough times but there will be others that experience growth. Employment in health services and government employment will both grow, at least in the short term, and in the longer-term, there is likely to be increased investment in medical research, hospitals and medical centres.
The growth in the government sector is already showing a big positive impact in Canberra, with search activity increasing in March from buyers, renters and even for new developments.
It’s too early to definitively call the market, but we do know that there will be winners and that there will be losers.
In other news, I want to update you on auctions and private inspections.
There has been some concern that auctions couldn’t be run from the vendor’s home but the Real Estate Institute New South Wales’ most recent update confirms that auctioneers can conduct auctions at the property, at the auctioneer’s rooms or at the real estate agent’s office, with the agent attending to assist the auctioneer.
"auctioneers can conduct auctions at the property"
However, if the auction is held at the vendor’s property, because of the social distancing requirements, only two people can be inside the property: the auctioneer and the agent. The vendors need to wait outside.
In addition, at private inspections only two people can view the property at the same time. This means that if you are a couple, the agent can only take you through one at a time. Now apparently entire families have been turning up for these private inspections, but please don’t because it’s pointless. It is impossible for the agent to show everyone through.
Lastly, in a webinar this morning the Real Estate Institute NSW interviewed NSW Fair Trading about residential rent relief.
This issue between tenants, agents and landlords needs to be resolved as quickly as possible. The good news is that there will be a result in the coming days, perhaps even over the Easter weekend. However, once this announcement has been made amendments will still need to be made to legislation.
Currently, there is a moratorium on evictions. The current advice to tenants is to keep paying rent and then negotiate if you are in financial distress, ensuring that you communicate in writing with your agent, who will have a conversation with the landlord to try to negotiate an arrangement. Tenants also need to justify that they are experiencing hardship. When they come into effect, the new regulations will set out this process.
If this negotiation process is unsuccessful, NSW Fair Trading is able to assist through their mediation service. Contact information can be accessed through their normal call centre, details of which are available online.