MARKET INSIGHT
It has been a really interesting week. Open for inspections were allowed again (maximum of 10 people at a time) and a lot of agents seemed to think the market might click back into gear and volumes lift. Deals are still few and far between, but there are a lot of buyers out there “looking”….
The next 6 weeks will be very interesting. I feel like we’re in a window where the news is as good as it might get for a while:
- Open for inspections are back on and Auction volumes will rise in the next month. The last two weekends of June could be the largest since Covid started
- The Covid news has been positive and Governments are motivated to get the economy going again
- There are a lot of buyers out there, so results, whilst few and far between, have been good. I think prices have slipped by around 10% from earlier in the year but they seem to be holding there – there are a lot of buyers ready to pounce as soon as the price is right. A great example was 32 Beatty Avenue, Armadale which sold during the week. It spent 6 weeks on the market at a price of $1.75m – $1.925m but we adjusted this back to $1.6m – $1.76m 8 days ago and immediately had 5 fresh inspections and a buyer who had seen it a month ago stepped up and bought it in the revised price range.
The big question that looms for the Melbourne property market is what is down the road, particularly when some 320,000 mortgage deferrals across Australia expire in September / October period. This is when we will truly see any stress come to the surface, or perhaps find out how deep our property market is.
If you are a discretionary seller in the next 12 months I would be considering a sale now. No one is going overseas on holidays in June / July this year and the market has been relatively ok of late – you are likely going to find a buyer at a reasonable price in a reasonable timeframe whereas things could change up ahead.
Advice remains the same for buyers however as the market is going to stay low turnover for a while to come – when you see the right thing at the right price please grab it as you might wait a long time for another!!
Advertised vs Off Market
Up until last week there were too few vendors willing to commit to pro-actively marketing their property – buyers were just holding back on off market properties – but that has noticeably changed. As soon as the inspection restrictions were lifted last week a whole raft of newly advertised properties went woosh on to the market – many agents and vendors clearly waiting for that moment. I have been advising all of my clients that whilst we might be able to bring a market to their property, it is the advertising that is causing buyers to act.
I have had inspections in the past week at 8 different off market listings but no offers from those.
I sold two advertised properties in the past 7 days (at healthy normal prices).
Therein lies the lesson…
Open for Inspections vs By Appointment
I have had feedback from multiple buyers in the last week that they have loved the experience and service they receive when things are done “by appointment”. Let’s face it – one of he reasons Auctions and Open for inspections were partly invented so that agents could handle more volume and make more sales. There are aspects of creating competitive tension and herding buyers that are positive of course, but not all agents are good at this (some just hand out brochures!).
I personally have loved the “by appointment” phase we’ve had and I’m going to continue it as a policy for most of my listings. On the weekend past I only scheduled 2 OFI’s but had 5 individual buyer appointments. I am getting better outcomes with “by appointment” and buyers are liking having the agent there to answer all questions, the house to themselves and the time and space to really evaluate whether it is right for them. I have spoken with agents from other companies in the past week who have had similar feedback – it will be interesting to see if there is a shift in across the board. This certainly isn’t a market for volume driven agents…
Three Interesting Charts
- Year on Year change in Seaches on REA
2. Ages most affected by Job Losses since Covid
3. industries Most affected by Job Losses since Covid
Key takeaways for Melbourne real estate:
- as we re-emerge from this crisis, moving home is on a LOT of people’s minds…
- The 40 – 60 age bracket are where most of the executive and management jobs fall; a parallel can be drawn from this to the family home market, explaining in some part why there are very few sales, but also very little panic at the moment
- It is very subjective as to how everyone has been affected. I have made more sales during Covid than the average of my past 6 months (this is probably the exception however..) but also shows that the largely professional services clientele we deal with are forging ahead with property purchases and are perhaps even using this market as an opportunity
- 320,000 Australian homeowners have been allowed to defer their mortgage repayments – the big question will be whether those people can get their affairs in order to weather the storm ahead. The above graph would appear to give them very few excuses…
Global Insight with Jarrod Randolph
Jarrod is a good friend and one of the great intellects in Global Real Estate. He is based in New York, having transacted over $2bn worth of deals in his short career. He speaks to us this week from Miami to provide insight into what is happening in New York at the moment, and what opportunities are presented in a city that is no stranger to crisis.
Our full discussion this week can be viewed here via the Instagram TV platform.