Spring is almost upon us and ordinarily that would mean the busiest time of year in real estate. But 2020 has been far from ordinary due to the COVID-19 pandemic.
While Australia’s property prices have held up relatively well amidst the coronavirus crisis, the longer-term outlook remains highly uncertain. In this article, we take a look at where we are at and explore how the market could fare this Spring.
Variation across the capitals
In June, we saw home values fall across five of the largest capital cities. The falls ranged from 1.1% in Melbourne and Perth, to 0.2% in Adelaide.
Hobart, Canberra and Darwin, in contrast, all experienced modest price increases. CoreLogic head of research Tim Lawless said the downward pressure on home values had been mild to date, due to a variety of factors. He said low advertised stock levels and significant government stimulus had helped buoy the property market in recent months.
Some experts have suggested the end of bank mortgage repayment holidays may result in larger price drops this Spring and a potential increase in distressed listings. For property hunters, there may be plenty of bargains to be found.
Steady growth in regional markets
Property prices across much of regional Australia have been rising, despite COVID-19. The latest Domain House Price Report reveals median dwelling values in regional Australia edged up 0.1 per cent over the June quarter.
The largest increases were in regional Tasmania, Victoria and New South Wales, where prices grew 3.4 per cent, 1.6 per cent and 1 per cent respectively. Mining towns and tree-change destinations were highlighted as strong performers.
Based on these findings, this spring we could see priced-out buyers or investors moving into regional markets. Here are a few regional hotspots you may like to explore if you’re in the market (source: Domain House Price Report, June 2020):
Median house price: $445,000
YoY change: 21.9%
Median house price: $432,500
YoY change: 19.3%
New South Wales
Median price: $320,000
YoY change: 23.1%
Median house price: $275,000
YoY change: 32.5%
Median house price: $442,500
YoY change: 22.9%
Median house price: $342,000
YoY change: 31.5%
Rents trending lower
CoreLogic figures reveal rent values declined 0.5% nationally over the June quarter, representing the largest quarterly fall since September 2018. Prior to this, the rental market had showed signs of rebounding, but the downward trend is expected to continue in coming months, experts say.
CoreLogic Head of Research Australia Eliza Owen said closing Australia’s borders had impacted rental demand, as new migrants tended to rent. Unemployment in the hospitality, tourism and arts sectors had also played a role, she said.
Low interest rates continue
Interest rates remain at an all-time low after the Reserve Bank of Australia cut the cash rate to 0.25 per cent in March. The cash rate is unlikely to change until employment recovers.
For aspiring property hunters this spring, there are some incredible home loan deals on offer. Some variable rates have dipped below the 2 per cent mark, as competition amongst lenders heats up.
If you already have a mortgage, it may be worth considering refinancing. Speak to us and we’ll compare the market for you.
Tips for nabbing a bargain this spring
Arrange pre-approval early
When you do come across a bargain, you’ll want to be sure your finances are in order. Now is the time to organise pre-approval on your finance for your spring property purchase.
Hit up local real estate agents
Connect with local real estate agents and build a rapport, so that they keep you top of mind when hot new property listings come up. You may be given the opportunity to make the first offer or hear about off-the-market deals.
Find out why the vendor is selling
Knowing why the vendor is selling may give you leverage when negotiating. For example, if they’ve bought a property elsewhere and need to sell quickly, you may be able to offer a shorter settlement term for a discount on the price.
Get in touch today
Whilst the pandemic has thrown plenty of spanners into the mix, it’s important to remember there are still opportunities for savvy buyers. Whether you’re looking for an investment property or fresh start in a new home, we’ll provide the support you need. Please reach out today!