Having caught up recently to co-present on a Depreciation-centric webinar in the lead up to the End of Financial year, Peter Foldes from Washington Brown was able to chat to leading property analytics researcher Terry Ryder (Owner and Creator of Hotspotting) regarding the effect of the COVID-19 Pandemic on Real Estate around Australia.
Terry, mainstream media seem to be touting that there will be a significant “hit to the Australian Property Market.” It paints a pretty gloomy picture; Do you think we’re going to see a “crash?”
The Australian real estate market is continuing to defy doomsday predictions of price drops as a result of the COVID-19 pandemic.
Prices are continuing to grow and the number of people searching for properties online is higher than it was at the same time last year, according to Terry Ryder, founder of Hotspotting.
All the data that is coming in actually defies the doomsday notions we’re seeing in news media,
Certain sections of the media in particular have been talking down real estate – and we’ve had dire predictions over the past two months about prices falling – but we just haven’t seen it in terms of the actual price data.
Figures from the nation’s largest property sales platform, realestate.com.au, are showing increases of up to 40% (compared to the same time last year) in the number of searches of properties for sale. People are certainly out there looking, at a time when the number of properties listed for sale has fallen significantly, and that might explain why the data on prices for March and for April was so strong, with six of the eight capital cities recording some price increase in April, as well as six of the seven regional market jurisdictions.
We often hear commentary on the “Australian Property Market,” implying that it behaves as a single commodity. Do you feel that some areas may actually continue to see growth throughout the pandemic period?
The nature of the local economy was pivotal in terms of which markets will continue to do well, which ones will stagnate and which ones might experience price drops.
Those markets which have and may continue to experience price drops are ones where the economy is heavily reliant on tourism, particularly international tourism.
My expectation is that the Gold Coast market will be one of the ones to drop, certainly in the short term
In contrast, strong regional cities with more diverse economies such as Ballarat, Bendigo, Orange, Albury-Wodonga, Mackay and the Sunshine Coast should continue to perform well. These are all cities where the local economy and employment are strong in industry sectors that are doing well despite the virus-impacted climate.
For example, the biggest sectors in Albury-Wodonga in terms of Number of Jobs are supermarkets & food stores, hospitals & medical services, the military and aged care.
Another example is the Sunshine Coast: One of the major factors which appealed to investors are the numerous large-scale infrastructure projects – and work on these has not stopped during the COVID-19 shutdown. Current infrastructure projects on the Sunshine Coast total more than $20 billion.
The ticks are in the ‘pro’ column of why you would be looking at a region like that for investment!
In your opinion, is now a good time to be considering a property purchase?
It is important for investors thinking of entering the market at this time to not get swept up in the doom and gloom expressed by “news media” and to keep a balanced view of what was happening. There are opportunities to be found in the current market.
I think it is a very good time to be looking because there will be opportunities to buy well.
Generally speaking, real estate is holding up quite well but there will be exceptions.
If you are out there as a buyer right now you are not going to be competing with as many investors as you might have done in normal times. You can perhaps negotiate from a position of increased strength.
I think it is a very good time to buy, as long as you select a location that has the underlying fundamentals to provide good growth.