Article | August 18, 2021
The spring selling season might be pushed back for a couple of weeks or even months as lockdowns restrict activity in some states and territories, according to CoreLogic. Prior to the COVID-19 pandemic, sales and listing turnouts typically rise from September to November. Over the ten years to December 2019, the growth in new listings during spring averaged 15.7% while sales hit 6.8%.
CoreLogic head of research Eliza Owen said both sales and listings tend to be most seasonal in the capital cities, particularly in Sydney and the ACT. With the lockdowns, however, the in-demand locations might not witness the same level of activity this upcoming spring, which is only two weeks away. "Observing housing market performance through lockdowns reveals that both sales and listings volumes will fall through lockdowns," Ms Owen said.
What can be learned from last year's Melbourne lockdown?
The extended lockdown in Melbourne last year could provide a glimpse as to what could happen in this year's lockdowns. Melbourne was in lockdown from mid-July to late October. During the period, listings dropped consistently, hitting the lowest at 1,411 in the four weeks to September, which was 80.7% lower than the previous five-year average.
There are several factors that contributed to the slowdown during the period.
Aside from the obvious restrictions that have limited inspections and auctions to virtual sessions, the low levels of consumer confidence also dampened the overall market sentiment, with vendors being unsure whether they would get an optimal price for their properties. Mortgage repayment deferrals and other government support also contributed, as these prevented distressed sales. However, when restrictions in Melbourne got lifted by late October, there was a sudden shift in the market mood, with listings quickly recovering. "New listings volumes through December 2020 trended an average 40.4% higher than the previous five-year average, suggesting the spring selling season of 2020 was 'pushed back' into the final months of the year," Ms Owen said.
Lockdowns to only postpone market activity
Ms Owen said the trend in sales and listings through a lockdown indicate the relative stability of the economy and the housing market amid the COVID-19 pandemic. "This has meant that housing purchasing decisions were more likely to have just been postponed through lockdowns, rather than abandoned all together.” In fact, the muted sales activity through lockdowns actually led to an uplift in sales across Melbourne in December of 2020 and July 2021, a time when seasonally, sales volumes would usually be far more subdued.
"There are tailwinds in place for housing market demand to suggest this may happen again; household savings rates remain elevated, new average mortgage rates continue to reach new record lows, and many government fiscal stimulus and broader institutional responses have been resurrected amid renewed lockdowns," Ms Owen said.
Affordability might become a concern
The consistent surge in prices across capital cities in recent months have already resulted in the inevitable constraints in affordability. CoreLogic's Hedonic Home Value Index in July showed a 1.6% gain in dwelling values, a retreat from the previous growth of 1.9%. Ms Owen said some support schemes that supported consumer sentiment, such as JobKeeper and HomeBuilder have already ended which could dampen the expected rebound in demand.
The rising threat of the Delta variant of COVID-19 might also be a major headwind, as it could result in further lockdowns which will ultimately impact the incomes of Australian households. "With affordability constraints becoming a larger obstacle in the market, as well as the potential for tighter credit conditions further down the track, if buyer activity does not match the lift in listings we could see a gradual rebalancing between sellers and buyers," Ms Owen said.
Article | February 19, 2020
Any buyer that’s been looking for a home can tell you how difficult it is right now to find a home in their price range. Several factors contribute to this trend. Baby boomers are staying in their homes longer, and we have tons of millenials looking for their first or second home. So we have lots of demand, but not enough supply. This is great for sellers, but buyers want to be prepared for it to take several months to find the right property for the right price. Another reason we are seeing such an influx of buyers is because interest rates are staying very low, making it incredibly affordable to obtain a mortgage. As of writing this, a 30 year fixed rate mortgage has an interest rate of 3.62%, and 15 year fixed rate mortgage has an interest rate 2.87%!
Article | March 13, 2020
In the crowded conference room of a major institutional investor in late 2009, an investor asked the owner of a global real estate development company why so much of its good money had been thrown at obviously failing development projects. The answer was: Because we could. This anecdote raises a number of questions about checks and balances, alignment of interest, but also the understanding (or in this case misinterpretation) of market momentum. We analyze past performance, market dynamics and risks, and target markets/products going forward, yield expectations and interest rates, private real estate debt markets, and technological impacts. We provide some guidance to investors on how to look at potential commercial real estate investments in 2020 and how to avoid common market misperceptions.
Article | March 24, 2020
As we come to a close on the first week that most of us in the US are self-quarantining due to the COVID-19 outbreak (also known as coronavirus), we’ve already begun to feel the effects on the real estate industry. Direct marketing, physical face-to-face meetings are very much being put on hold. Not all agents are making this switch, however. As we discuss in today’s episode of In The Lead, there are agents who are still very much taking the business-as-usual approach when it comes to their marketing efforts. One agent we spoke to is still conducting open houses, but has made it a policy to keep all the doors propped open, in an attempt to keep people from touching doorknobs and spreading the virus. Other agents are limiting the number of visitors they allow into a home at any one time.