When Western Australian went into lockdown, the residential property market came to a standstill overnight. It was the innovative agencies that managed to keep the market moving while home opens/on-site auctions were banned, and social distancing was implemented.
What did the COVID-19 market look like?
The Australian residential market experienced about a 40% drop in the number of homes transacting whereas WA had a massive 60% reduction.
New homes to the market were already running at a lower level than the last four years edging the power to the sellers.
We witnessed a substantial drop in homes coming to the market decreasing by a similar amount to the homes that were selling, therefore still keeping stock levels low and creating some competition for buyers on well-priced homes.
New home build starts were already tracking down from a peak in 2014 at nearly 18,000 new homes to less than 7000 at the end of 2019 with a downward trend.
WA population growth was on the way up with interstate and overseas migrations on the up.
Since our peak in 2006 when WA median house price was the highest in the Country, April 2020 has seen us the most affordable median price in Australia at $465,521
The news headline-grabbing states, Sydney and Melbourne, had experienced significant “V” growth in their market and were a lot more vulnerable to price fluctuations. Market commentators and the Commonwealth bank were forecasting up to 30% reduction to the median.
There are many moving parts that impact the WA residential property market in both a positive and negative way.
The two areas that have the most significant influence are population growth and employment. The government has implemented some positive stimulus to influence this along with the industry.
Some of the influences may be just discussions in the media that can also temporarily change buyer sentiment, i.e. last year Labour proposed major changes to the capital gains and negative gearing on property. This had an immediate effect on investors disappearing out of the market place.
- Job keeper finishing in September 2020
- Homebuilder scheme $25,000 now until 31st December 2020
- First Homebuyer $10,000 grant
- WA border remaining closed
– Changes to our trade agreements with China are already effecting confidence and finance approvals in some industries
– Changes to the zoning density through inner suburbs are both negative and positive
– Any discussion in the market place about changes to property, i.e. stamp duty moving to a land tax.
– Unemployment rising and mortgage defaults rising
– Mortgage pause offered by banks finishing in September 2020
Leading agency changes
Some of the more progressive agencies adapted quickly with the marketing methods they used.
Most of these changes will be adopted as “best practice” for the future beyond COVID-19.
- Selling methods changed to online auction platforms becoming more widely used.
- 3D tours had a rise in popularity with over 400% more views through realestate.com.au
- Buyers could online request and book virtual tours with the agent talking them through the home before they had a live inspection.
- Larger agencies were able to offer clients multiple homes to view within their budget, therefore, selling more. Some of these homes were “quietly “ available.
- Use of real form and DocuSign digital contracts through the REIWA members web site.