A sense of normality returns to the property market but buyers still need to act fast

Eagle-eyed property punters are sensing an easing market, just as Victoria enters a seven-day lockdown due to an outbreak in COVID-19.

The heat in the property market is certainly becoming less frenzied and a sense of normality is returning. But market conditions remain strong and buyers are still out in full force. 

In Melbourne, property prices increased by 1.3% in April, with the median value hitting $744,679, according to CoreLogic figures. Evidently, this has calmed since last month’s 2.4% growth. 

Last time Melbourne went into lockdown, property prices came down by -6.1%,according to CoreLogic data.

However,for anyone wondering how the current seven-day lockdown could affect property prices,it’s important to note that:

· this lockdown is much shorter than the 112-day lockdown last year 

· prices in Melbourne are still up by 2.2% in the past 12 months – an amazing feat for a city which went through an extensive lockdown during this period.

Armed with insights and a chess player mentality we have prepared our clients for this snap lockdown buy inspecting any shortlisted properties and completing due diligence of selected properties. This has effectively positioned our clients to begin negotiations whilst effectively be reassured that no further parties will be joining the negotiations as inspections have stopped. As we found in the last lockdown, we found this time of isolation to be an excellent time to have meaningful discussions with agents. These discussions are essential in uncovering possible off market opportunities. Time is also dedicated to identifying properties that match a clients brief but are not currently listed, this is done through our various data sites.

Nationally, housing values increased by 1.8% in April, and shot up by 7.8% over the year. 

To put things into perspective, the decade average monthly change is 0.3% - so we’re still tracking well above this level.

Interestingly, the market is showing an ongoing trend of demand for houses surpassing units.

This is affecting property prices. Across the combined capital cities, value growth for detached houses is double that of units. Between January and April, house prices surged by 8.6% while unit values notched up by 4.3%. 

“A preference shift away from higher density housing during a global pandemic is understandable, however a rise in flexible working arrangements also seems to be supporting greater demand for houses around the outer-fringes of capital cities,” CoreLogic Head of Research Tim Lawless said. 

From my experience working on the ground representing buyers, buyer competition is still fierce.

Off-market purchasing avenues are becoming more common as buyers try to get ahead and skirt the competition. 

Time limits on offers are commonplace in this market, forcing buyers to make a quick decision. Get ready to make an early offer, have your ducks in a row and you can outsmart the competition.

Federal Budget 2021, or Pandemic Budget 2.0?

Anyone who paid any attention to the Federal Budget this month would have noticed how familiar it sounded. Indeed, the 2021 Budget was more or less an extension of last year’s one, which was the first Federal Budget since COVID-19.

Treasurer Josh Frydenberg reassured Australians that economic growth was back on track, stating that the country's “economic engine is roaring back to life”.

On the real estate front, it is obvious through the Budget that property is a top priority for the federal government. 

CoreLogic recently announced the total value of Australian residential property has reached $8 trillion. 

This is:

- 4 x the size of Australia’s gross domestic product (GDP), and

- about $1 trillion more than the collective value of the ASX, superannuation and commercial real estate stock.

Shocking figures here.

But what does this mean for homeowners? 

This massive jump in Australia’s housing values has increased the equity and, effectively, wealth of property owners across the country.

With so much wealth at stake, the federal government’s goal is to protect this while still encouraging home ownership. They are doing this by implementing policies that make it easier to buy property and get a mortgage, thereby pushing up demand in the market. 

Some of these demand-side measures include:

- First Home Loan Deposit Scheme (FHLDS) - another 10,000 places added for the FHLDS, which was first introduced in the 2020 Budget

- Downsizer contributions - Under this scheme which started in 2018,Aussies aged 65+ can top up their super by up to $300,000, tax-free, using the sale proceeds of their home. The eligibility age threshold for downsizer contributions will be reduced by 5 years, from 65 to 60.

Also,the government announced an additional $15.2 billion in infrastructure investment. This brings the total investment in infrastructure projects to a record $110 billion over the next decade. 

This is an indicator that the government is prioritising infrastructure development to not only grow our economy post-COVID, but also make it more resilient,while putting people in work.

The return of investors

Amid all this value growth and Budget action, property investors are sniffing out an opportunity and are making a gradual comeback to the market.

Currently,investors still make up only about a quarter of overall mortgage applications,which is below average levels, according to the Australian Bureau of Statistics. 

But what’s interesting is investor housing loans have surged by 54% in the 12 months to March 2021.This is practically on par with the growth seen in owner-occupier loans, at 55%. 

Experts expect investors to fill in the gap as first-home buyers retreat when government incentives end. 

Savvy investors flocking to the market can only mean one thing: the property market is buoyant and they are confident enough to park their money in it. And it will take more than a seven-day lockdown for this confidence to sway.

Recent success

We recently enjoyed success with a significant off market purchase in Glen Iris for our medico clients. Thank you Ash Howarth for facilitating this opportunity for us. This is Ash & director Tonya Davidson pictured at the VIP opening of a significant Ashburton Home.

We very much enjoyed working with our lovely clients Gemma and Hamish in helping them secure their new home in Armadale. Thank you Jack Moss for your assistance and service.

Happy happy clients. We loved working with this lovely family and we were thrilled to achieve their brief, right down to the street they wanted! Thank you Jesse Matthews for great communication and responsiveness to us and our clients.

Thank you Domain for having us as your guest to the recent Rise Conference at the Melbourne Convention and Exhibition Centre. Great speakers and great to catch up with the agents of Melbourne.

Lastly...

Our CEO, Tonya Davidson, has decided to sleep under a cardboard box! Yes, you heard right: " This winter I'm spending one of the longest, coldest winter nights on the streets to help raise money for people experiencing homelessness. Homelessness can affect anyone - women, men, and children. It has devastating consequences for individuals and families. But you can help!

Housing and shelter is something close to my heart. My parents ran a home for children in the 70’s, children that were wards of the state. My parents were effectively “Mum and Dad” and we all lived in one giant house. I knows first hand the importance of shelter so I hope you will join me in supporting this worthy cause."

Rather than camp on the street alone, she has partnered up with the team at Woodards who have been involved with the CEO Sleep out for many years. They are going to show her the ropes and hopefully share their coffee! Support us during the Vinnies CEO Sleepout and your donation will help the St Vincent de Paul Society empower more people to get off the streets and into stable accommodation. Vinnies provides counselling, education, health and employment services to help people to lift them out of the cycle of poverty.Every donation is meaningful.Just fifty dollars can provide a whole family with a warm, nutritious meal this winter. Together we can combat homelessness in our community. Please help us raise funds today! The impact of your generosity will be felt well beyond the 17th of June.

Donate now!

https://www.ceosleepout.org.au/fundraisers/tonyadavidsonadvocatescomau