We are not going to lie, April has been a very tough month for many of us. We have had to come to terms with a new way of living, and we have spent a significant amount of time at home, writes Melinda Jennison.
For many of us, we spent the Easter holiday period at home, we are working from home and now we are juggling the supervision of our children’s school education – from home.
It is probably fair to say that our home has become our cocoon for everything that we do!
There have been some scary headlines from journalists about property prices plummeting throughout the month. Admittedly, you do have to read into the story because the headline generally states the “worst possible” scenario based on a number of alternative possible outcomes in the months ahead.
Also, most commentators are also suggesting the Sydney and Melbourne markets will be impacted more than others due to the much higher debt-to-income ratios in those capital cities, compared with elsewhere around Australia.
Another reason to always be cautious about the information you are reading: Australia is NOT one property market!
Of course, predictions are just that and there is no certainty about them. A lot depends on how long COVID-19 impacts our lives, and conditions are too uncertain to make any meaningful assessment.
In saying that, Australia has done a great job of flattening that curve! In fact, we are excited that the Queensland government is already easing restrictions – the first step towards life returning to a “new normal”.
With so few cases reported in Queensland since 5 April, we are optimistic that things will continue to open up and we can start to get our economy moving again.
According to SQM Research, listing volumes are 10.1 per cent lower in Brisbane than they were 12 months ago, and in the last month alone (between March and April 2020) listing volumes were down a further 5.6 per cent, so we expect transactions volumes will remain low for some time yet, simply due to limited supply.
New Building Approval data released early in May from the ABS confirms that year-on-year new house approvals have fallen 3.4 per cent in Queensland and year-on-year new unit approvals have plummeted 24.4 per cent.
Approvals are a leading indicator for future new housing supply, so this shows the shortage of property may continue for some time yet.
There have also been fewer sales across the city throughout April as well. With open homes banned and auctions having to move to digital platforms, we all had to change the way we conduct our business.
There have been fewer buyers and fewer sellers throughout the majority of the month across Brisbane. While there was a distinct shutdown in the earlier part of April, since Easter we have definitely seen the optimism return (from a buyer’s perspective), so there is hope that this renewed optimism continues in the coming weeks.
Even buyer search activity on realestate.com.au has increased 41 per cent after a sharp decline at the end of March 2020, so people are starting to at least “think” about real estate after going into hibernation for a few weeks.
This month also saw the Queensland government announce some very unfair proposed arrangements to be legislated between landlords and tenants. However, after less than a week of intensive industry lobbying, what ended up being legislated is very fair and will now guide any hardship arrangements for landlords and tenants.
Despite this, property managers in Brisbane (outside of the inner CBD area) are reporting less than 2 per cent of all tenants experiencing any hardship or arrears to date which is reassuring for landlords and those looking to enter the market in the near future.
In terms of property values, if you already own property in Brisbane you will be pleased to know we have seen no noticeable drop in values, and this is consistent with the feedback we are hearing from our agent network across many parts of Brisbane.
The latest Corelogic Hedonic Home Value Index showed an increase of 0.3 per cent in dwelling values across the city in April 2020. This is reassuring given a typical settlement period is 30 days in Brisbane and the pandemic was declared on March 11. So, this months’ figures would capture a lot of the contracts that were entered into throughout March when the number of coronavirus cases was rapidly escalating.
There is obviously plenty of uncertainty that remains about the immediate future. While Australia has had a remarkable response to tackling the coronavirus, any longer-term impact on housing (and specifically the Brisbane property market) will depend on factors that hinge on the timing and the extent of social distancing policies being lifted.
Already we are seeing positive signs that the government intends on opening up the economy gradually, and this in turn will likely support consumer confidence, which in turn should see housing market activity pick up again.
Of course, what we don’t want to see is a second wave of coronavirus cases, so let’s keep our distance and do what we can to stay safe and slowly kickstart our economy again.
By Melinda Jennison, managing director, Streamline Property Buyers