We are now nearing the end of September 2020 and a prolonged stage 4 lockdown has left an unforgettable and devastating mark on business and the people of Victoria.
Many businesses will not reopen and Melbourne will lose many enterprising young workers to other states.
Queensland will be a major beneficiary of a predicted exodus from Victoria. Interestingly, I am taking enquiry from those seeking to relocate from Victoria to Queensland seeking work , a house and a perceived brighter future.
I was only 27 in 1992 and what is about to happen reminds me of the Cain/ Kirner Labor government and recession before Jeff Kennet restored some pride and surplus back to our treasury coffers following the sale of state government crown land, our public utility companies and the closure of so many public schools.
Similar and if not greater steps will be required this time as in the end someone always has to pay.
Like many Victorians for the first time in my life I have been unable to work, in my capacity as a property advisor, buyer’s agent and vendors advocate as real estate transactions have effectively been shut down with no private inspections allowed and no auctions.
There have been a handful of properties sold virtually, but this is high risk and not something I would consider or entertain for my clients.
The purchase of vacant land or off the plan perhaps the only exception , providing the buyer has seen the property before, can drive past within the 5 km radius or is aware of the general geographic location and surrounds.
Otherwise the risk is just too great.
I want to ensure that I know what it is that I am buying.
Is the title dimension and physical occupation of the land the same?
If I put on my property valuers cap, my many years of experience and training as a valuer has taught me to be wary.
Checking the connecting distance of a property to the nearest street with a measuring wheel or tape and checking frontage and depth dimensions against title is still necessary.
Too often in the field, I have seen boundary encroachment. Fences, garages, carports, eaves and other structures erected on the wrong land. Sometimes in favour and sometimes not.
In the inner suburbs of Melbourne these encroachments are very common particularly for property where buildings and boundary fences were constructed prior to the Town and Country Planning act was introduced in 1961.
Today few people undertake these checks before they buy property only to discover years later when they are served with a notice for adverse possession by an adjoining owner.
Yes , land that you thought you legally owned can be lost by possession rights supported by survey .
As they say “caveat emptor “or “buyer beware” and a lesson hopefully learned by young buyers, lawyers and valuers!
Back to Covid, I have been involved in several transactions of late where buyers have been unable to settle because they are not able to sell their own property.
Another lesson learned! Always best to sell and have the cash in the bank before you buy something else.
Some buyers in this situation have had to quickly arrange bridging finance or some forfeit their deposit monies. Others have lost their job and are in financial distress, unable to sell their homes / assets to relieve them of the financial burden.
Shelter is a basic human right. Being able to buy/ sell real estate out of necessity through bereavement, death, divorce, illness, job or distress is essential in a developed economy as long as it can be performed in a safe and intelligent way.
One on one, contactless inspections between an agent and a buyer, whilst wearing a mask and following all government health department protocols would seem safer to me than standing in a queue to buy a takeaway coffee or going to your local supermarket. We all need to be cautious and follow the rules but we also need more common sense and balance between health and the greater economic consideration.
Fortunately, Regional Victoria is back in business with auctions now allowed for up to 10 people and open for inspections for up to the same number. That is great but with 5 km travel restrictions in place for Melbourne Metropolitan area , Regional real estate activity will be subdued until Melbourne buyers are allowed to travel.
- House price median fell -1.4% for the month of August 2020.
- Median house price in Melbourne is $781,888.
- Year to date house prices are up 6.0 %.
- Unit price median fell by 0.80% for the month of August 2020.
- Median unit price in Melbourne is $562,780
- Year to date unit prices are up 5.7 %.
Source: Corelogic 1/9/2020.
- The property market in Melbourne will open strongly after lockdown due to months of accumulated pent up demand.
- Activity will be unusually busy throughout December and January, aside from the main public holidays.
- Few agents will close for Christmas holidays. Most have already had 6 weeks off during lockdown.
- Longer term , Covid will accelerate property trends that had already started to shift. Millennials , a very large population demographic will move out of the inner city to the suburbs. That is a reversal of the trend we have seen for the last 15 years. Affordability of inner city housing has driven this trend. So to the desire for more space and land as this demographic group approach the family stage.
- Consequently, the middle ring suburbs of Melbourne , close to schools, transport hubs, shopping, hospitals and other public infrastructure will flourish. This is a trend that is occurring in London, New York and other large capital cities of the world
- The inner/ middle west and northern suburbs of Melbourne will be in demand
- Property with a home office is likely to surge in demand in the coming months
- Enquiry to agents for Regional Victorian property has skyrocketed as have search listings on real estate sales portals.
- Regional centres such as Geelong, Ballarat and Bendigo are expected to grow strongly over the next 3 years
- My general outlook for detached residential property in Victoria is positive over the next 3 years.
- There is general support from the banks. Mortgage interest rates remain low and are likely to fall further. Government assistance and support will cushion the property downside risk.
- Affordability has improved greatly and is back to 2018 levels
- We have experienced some price falls to date in the order of 6-7%. This is quite a moderate downturn , considering we are 6 months into restrictions and lockdown
- I expect overall price falls will be no greater than 10% from top to tail
- I predict price growth of 15- 20 % between 2021- 2023
- Longer term the stimulus will bring forward growth to residential property
- Reduced housing starts will also create conditions and support for positive property growth over the next 3 years
- Investment property growth will remain subdued and falling net overseas migration will impact negatively inner city rents particularly high rise in the CBD, Southbank and Docklands.
- Rents for student accommodation supporting the university sectors will also fall.
- Migrants tend to rent for the first few years when they arrive in Australia rather than buy and so it is rents that will be soft with supply greater than demand.
- Capital values will be less affected by falling migration outside of the abovementioned sectors.
- The return of thousands of expatriate Australians will counter and support falling migration numbers
Contact Greville Pabst for independent property advice first.