What are Real Estate Agents doing in Stage 4 Lock-down?
The short answer is not very much.
Stage 4 lock-down means that estate agents offices are closed, but agents are still able to work.
However as agents are unable to visit properties, they are unable to conduct appraisals or provide marketing proposals. They also can’t show potential buyers through properties.
For people intending to sell their property in Stage 4 lock-down, tradesmen cannot undertake presentation works, nor can any other work be done to prepare properties for sale (unless they do it themselves).
There are however some properties in Melbourne still being sold during this lock-down. Sales are achieved by private treaty, off-market sales and auctions by Zoom.
However all of these properties were either on the market prior to Stage 4, or were ready to go on the market where buyers had been able to inspect them. This supply is obviously rapidly running out.
Will there be a Flood of Properties for Sale after Stage 4?
The short answer is probably not, however this may change by mid next year.
The decision to sell a property often takes a vendor many months to make, and usually involves discussions with multiple agents before preparing the property for sale.
Agents report that they have a number of properties booked for sale once Stage 4 is lifted, however these were all ‘in the pipeline’ pre Stage 4 lock-down. As agents can’t inspect new properties, there will consequently be a ‘lag’ in new stock coming onto the market.
Once an agent is appointed, it takes about two to three weeks to prepare a property for sale (depending on what is to be done). As nothing can be done to properties until after Stage 4, the marketing of those properties will likely be spread into November and early next year.
Agents report there has been no ‘forced’ selling of property since COVID began due to the major banks offering a moratorium on loan repayments. However once this moratorium ends and Job-Keeper is phased out, agents are anticipating more properties coming on to the market next year.
Should you sell during COVID-19 or wait?
Since COVID-19 began to impact on the property market, we are often asked by vendors whether its better to sell now or wait until we can hold auctions and the market gets back to normal.
Unfortunately there is no simple answer, and it depends on individual circumstances.
Of course, during Stage 4 lock-down, it is impossible to start the sale process, however some planning can still be undertaken in anticipation of Stage 3.
House prices in Melbourne have held up well since March according to CoreLogic. Prices have only fallen by an average of 3.2% in the last quarter. The main reasons for this is a combination of a lack of available properties to for sale, and the low cost of finance.
All agents complain there is a shortage of stock.
Of course, averages can be deceptive, as not all prices have moved consistently. More affordable properties have held their value, while higher value properties and development sites have fallen further.
The opinions of Bank economists on how COVID-19 will impact on property prices vary significantly.
NAB estimates around a 10% to 15% decline in 2020/21, Westpac ‘has modelled declines of up to 20%’, and CBA has forecast ‘that house prices could fall up to 32% over the next three years’.
Only time will tell who picked the market correctly, but a lot will depend on how deep and how long the recession will last, and how long interest rates remain low.
Whether someone should sell now or later depends on how much time they are prepared to wait, and when they need the money.
We are finding that people are putting off moving into aged care (for obvious reasons), so they are not selling their homes at this time. This will continue until COVID-19 has been eradicated from aged care facilities.
Given the banks forecasts, selling sooner rather than later may prove to be the smarter option, especially if the vendor needs to sell in the next year or so.
What can Vendors do Now?
While we are in Stage 4 lock-down, there is a lot a vendor cannot do, but there are some things they can.
Firstly, research the local estate agents and decide on a short list of who has the greatest market share of similar properties in the area. Then decide who in the agency appears to be the most active and contact them.
Although the agents can’t inspect property physically, they can do some research and be ready to move once Stage 4 is over. Agents can then provide marketing proposals and a vendor can select an agent.
If the aim is to sell this year, there really is a limited window to get the sale in late Spring or pre-Xmas.
Ideally vendors should have tradesmen booked to do all presentation work as soon as Stage 4 lock-down is over.
We are fortunate in having a good network of tradesmen, and have them ready to work on a number of properties we are managing once Stage 4 is over.
If you have any questions about how to approach selling a property in Stage 4 lock-down, please call me to discuss.
Robert Allanadale-Director
Tower Property Advisory