Over the past month, both State and Federal Governments have introduced new measures to address the ongoing threat posed by the Coronavirus (COVID-19) outbreak.
In an effort to curb the spread of the virus, social distancing measures have significantly altered business practices across all sectors of the economy. Among the Government led directives, are bans on open real estate auctions and open home inspections. These have now been replaced by online auctions and private property inspections.

Social distancing will also likely delay property transactions as policies may intensify. It is hard to forecast the exact impact this is going to have, but it will certainly adjust how the real estate industry operates. Although it is difficult to be definitive in these rapidly changing conditions, we currently foresee a downturn in the property sector to be relatively short lived.

For the second time in March 2020, the Reserve bank of Australia cut the official cash rate to a new record low of 0.25 per cent in an emergency move to support the economy facing challenges due to the Coronavirus. Government and RBA measures to help struggling businesses and households through the Coronavirus shutdown should help in preventing a really big rise in unemployment. Some economists have stipulated that if there was a rise in unemployment to around 7.5%, it would likely drive a 5% dip in property prices. However, once COVID-19 is under control, a market recovery is anticipated as the Australian economy bounces back and consumer confidence rises.

What do I need to know if I’m looking to buy a home?
For those that have the capacity to buy in the current market, money is cheap and there could be some great opportunities over the next few months. In this environment, buyers who have very secure jobs are actually in an improved position because the overall market is weaker. There will be buyers who are simply unable to buy now due to reduced incomes and job uncertainty. Then there are others who are adopting the wait-and-see approach.

What do I need to know if I’m a property investor?
Property is deemed a safer investment option compared with the share market and those who take a long-term perspective will always outsmart short term reactive thinkers. It has never been cheaper for investors to obtain finance and if prices come down, rental yields will increase, and investors will be in a far greater position to capitalise. A major point to factor is that it could take longer to find a tenant, or a rent reduction may be required during these unprecedented times.

What is ahead
Unfortunately, no one has the crystal ball to accurately predict the future. We can’t be sure how the Coronavirus health crisis will pan out globally. We also can’t be exactly sure how it will affect the Australian economy or our property market until we see an end to this crisis. There will be some business casualties along the way, but eventually, things will improve and we will get through this.

Once COVID-19 is under control, the housing market is likely to bounce back with a combination of record-low mortgage rates and the likelihood that they will remain at these levels for quite some time. In addition to this, a slowdown in property transactions in the coming months combined with continuing population growth will likely create pent-up demand for housing. This pressure on supply and demand will once again drive high property prices.

The team at Beckett are continuously monitoring the latest developments so that we are best informed to help our clients make the best decisions to ensure both personal and financial health. We are still trading and assisting our clients under the Government’s new health guidelines and we welcome any future enquiries.

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Melbourne’s property market is currently experiencing the quickest price recovery on record, which is disheartening for many buyers who hoped that prices would stay level after the recent correction in 2018 and the first half of 2019.

This week, the REIV released data for the September Quarter stating that Melbourne’s median house price jumped 4.5% in just three months to $830,000. The property shortage is really starting to push prices up and forced the largest growth in Melbourne home values in two years.

There has also been a strong resilience across the metropolitan units and apartments sector with prices increasing by 3.9%, despite higher supply levels. This most likely comes down to affordability constraints in the market as well as more first home buyers supporting demand, thanks to first home owners stamp duty incentives.

The top end homes of Melbourne previously recorded the largest decline over the past twelve months, but now these suburbs are leading the charge for the most rapid recovery.

What’s driving the house price increase?

The strong rebound is attributed to a variety of factors including:

• The Liberal party winning the Federal Election.
• Three interest rate cuts and record low mortgage rates.
• APRA loosening credit rules.
• Higher levels of investor participation.
• Strong population growth.
• Weak Australian Dollar which is incentivising foreign buyers again.

Another major driver of this sudden price surge is the shortage of real estate stock which is approximately 40% lower than this time last year. Home buyers have suddenly changed their strategy when either up-sizing or down-sizing their homes.

The switch from a “Seller-Buyer” market

During 2018 and the first half of 2019, people were not confident they would achieve their desired price when selling their home and they felt more comfortable selling first as they wold know exactly what they had in the bank before they bought again. This forced the market to experience many ‘seller-buyers’ and contributed to very healthy stock levels. It made sense to people – in a declining market, sell at today’s price and buy at tomorrow’s price.

The switch to a “Buyer-Seller” market

Now that the market has turned and confidence is sky high again, people are very confident they will achieve their desired sale price for their home. However, they are now concerned they won’t be able to secure their new home or get priced out of the market. This has led to the ‘buyer-seller’ strategy which is putting more pressure on property stock levels. People aren’t listing their homes for sale until they buy first, which again makes sense in a rising market – buy at today’s price, sell at tomorrow’s price.

With positive media, easier lending circumstances, high auction clearance rates, price growth and restored buyer confidence, some property commentators are forecasting double digit capital growth for the year ahead.

The fear of missing out and then paying more is now the current theme in the marketplace. This sentiment was also experienced during the property boom from 2013 to 2017 when prices were soaring.

Speak to the experts in Property

If you are a first home buyer, upsizing your property or downsizing for lifestyle, a property investor or developer, the correct property selection is now more important now than ever.

Beckett Property are fully licensed Buyer Advocates and highly acclaimed Property Advisors who specialise in property acquisition services for home buyers, investors and developers across Melbourne. We help our clients grow, protect and pass on their wealth through a wide range of services.

If you are looking for assistance to source and acquire your next home or investment property in this market, please contact one of our experts today.

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