The real estate industry adapts well to Covid-19 restrictions

Good morning,

I hope you had a lovely weekend.

With some light appearing at the end of the Covid-19 tunnel, it is a good time to reflect on how Covid-19 has impacted the residential real estate market from both a buying/selling and rental view.  At Elite, April still proved to be a busy month (albeit volumes less than normal) securing for both our Investors and Owner Occupiers.  The rentals team were busy conducting private inspections, filming virtual property tours and leasing out vacant properties.

Buying/Selling

The volume of transactions over the past six weeks has dropped by over 50% of what should normally be occurring.  Most negotiations are now via private sale, expressions of interest and off market, with the occasional online auction happening.

Private treaty negotiations can be difficult when multiple parties are looking to secure the same property.  We have been involved in many private sale negotiations over the past month which have had multiple interested parties.  In most of these cases, the negotiation has turned into a ‘best offers’ negotiation and a deadline placed by the agent. These negotiations can be tricky when there is no information offered by the agent in regards to the other offers.  In these instances, it is so important to understand the value of the property to avoid overpaying. But also, it is equally crucial to know the right questions to ask the agent to ensure the offer you has submitted is not tens of thousands above the other offers.

Whilst the amount of buyers in the market has decreased, so has the number of properties for sale and therefore the property market has remained balanced.  CoreLogic reported that Melbourne property prices only fell by 0.3% in April which is consistent with what we have been witnessing on the ground.

Rental

The past six weeks has been challenging for many landlords and tenants.  After the Victorian Government made their announcements three weeks ago, we were inundated with phone calls from tenants requesting rent reductions and payment deferrals.  For a rent reduction to be considered, the tenant must show financial hardship.  We have found that once evidence of hardship was requested, the amount of requests for reductions decreased considerably.  In most instances, we have had landlords and tenants negotiate fair and reasonably outcomes.

Vacancy rates have increased and our team have had to be creative in order to incentivise tenants to apply.  Rent free periods and slight rental reductions have been offered on many properties and the strategy appears to be working to attract interest and reduce the vacancy times.

Whilst the property market has been affected, it seems the industry has adapted quickly to overcome any challenges it has in order to still transact.  Virtual tours and auctions are successfully taking place and private inspections are the new normal.

I hope you have a great week!

Kim Easterbrook