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The thought of selling your home because of financial hardship is heartbreaking, and while it’s always preferable to hold property, particularly in the midst of a recession, for some COVID-hit home owners, the decision to sell in the current market conditions could prevent long-term pain. 

Back in March, the Australian Banking Association announced six-month mortgage holidays to assist home owners that were unable to make mortgage repayments because of job losses during COVID-19. As the loan deferral period nears its end, lenders are encouraging borrowers to restart repayments, if they can. For those still struggling, the mortgage holiday period has been extended by a further four months to January 2021.

However, as Australia officially enters its first recession in almost three decades as a result of the health crisis, further job losses are expected with some industries expected to take years to recover. That means a loan holiday for some mortgage holders is only putting off the inevitable.

While it’s always preferable to hold property, home owners with poor financial prospects should consider selling sooner rather than later. Picture: Getty

If we look at the years leading up to Australia’s last official recession in the early 1990s, the unemployment rate had reached a low of 5.8% in late 1989. It then rose to 11.2% in December 1992 and didn’t fall back to pre-recession levels until August 2003.

Although it wasn’t a ‘technical’ recession, prior to the Global Financial Crisis the national unemployment rate reached a low of 4.0% in February 2008 and climbed to 5.9% in June 2009. The lowest the rate has been since then is 4.9%, and that was only for a month.

Unemployment reached 5.1% in February this year before the pandemic hit, and it’s now sitting at 7.4% with predictions it could hit 10% by Christmas.

Why are these figures important? Because the hard reality of the current recession is that some of the jobs that have been lost are not going to come back and the unemployment rate is unlikely to return to its pre-pandemic level for a number of years.

Given this, mortgage holders who have lost their jobs should seriously consider the likelihood of them finding another job, or a job with an equivalent salary. If the likelihood of this occurring is low, they should strongly consider selling their properties sooner rather than later.

Three reasons why selling now is a good option

1. Competition

Of course, selling a home is much easier said than done. Most humans are optimistic by nature and many Australians hold the belief that the current situation will improve (and it will), but the longer struggling home owners wait to sell, the more competition there is likely to be.

Struggling home owners will face less competition in the market if they decide to sell now. Picture: realestate.com.au/buy

One of the main reasons that COVID-hit mortgage holders should consider selling now is the fact that the supply of new listings coming onto the market is very low, and not just in Victoria where stage four lockdowns have hampered the property market.

At the end of August 2020, the number of new properties listed for sale across the country was about 9% lower than for the same period last year. Meanwhile in Victoria, listings were significantly lower but they were generally at similar levels to what they were in 2019 elsewhere. Keeping in mind that 2019 had the lowest number of new listings for any year since 2011.

2. Demand is high

Another reason why home owners in financial hardship should consider listing their properties for sale now is that demand for property is at record-highs. There has never been more people actively looking for properties for sale, and equally, the volume of high-intent search behaviour on realestate.com.au is also close to an historic high and substantially higher than a year ago.

The lack of stock is potentially hindering buying activity currently because many potential buyers simply cannot find the right property to purchase. Especially when you consider that spring is the time of year when we would typically see new property listings increase.

3. Record low interest rates

Finally, a key contributor to the increase in interest for properties currently is the record low cash rate. According to the latest Reserve Bank of Australia data, the new three-year fixed rate mortgage rates average is 2.3%, the lowest they have ever been.

The RBA has stated that it will not increase official interest rates until such time as progress is made towards full employment and it is confident that inflation will be sustainably within the 2% to 3% target band.

While the cash rate may not increase for a number of years, there is nothing to say that banks will not independently increase mortgage rates. Given this, there may be some urgency for people to purchase a home and lock in these low rates sooner rather than later, and an increase in the supply of homes for sale is imperative for buyers to achieve that.

Mortgage rates are the lowest they have ever been in Australia. Picture: realestate.com.au/buy

Deciding to sell is no easy decision

The decision to sell a property should never be taken lightly, particularly during a recession. The preference should always be to hold on to your property or downsize – but out of desire, not necessity.

However, in economic conditions such as the current situation, it would be wise for home owners with poor financial prospects to take advantage of the current market conditions.

There are no guarantees that the market dynamics we are currently seeing will remain the same in the coming months.

The post Three reasons why COVID-hit home owners should consider selling now appeared first on realestate.com.au.

Buyers can get ready to strike when restrictions ease. Picture: Robert Cianflone/Getty Images

Buyers must do their homework before launching into the spring property market when stage four coronavirus restrictions ease, experts say.

Realestate.com.au chief economist Nerida Conisbee said a key part of the househunting process was finding the right location to suit your needs.

She warned some suburbs and property types were “higher risk than others for price decline” — especially in the midst of a downturn. This was the case for the inner-Melbourne apartment market.

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“You could probably get a good price because there are a lot for sale,” Ms Conisbee said.

“But also keep in mind if you are investing it might be difficult to get a tenant.”

On the flip side, while “you’re not going to get a bargain” in premium suburbs like Elwood and Prahran, values were holding up much better there.

“Broadly, the outlook is very uncertain,” Ms Conisbee said. “If you are looking to buy now, keep in mind you’ll have far better luck (earning capital growth) by holding (the property) for a longer time period.”

Realestate.com.au chief economist Nerida Conisbee.

Collings Northcote director Christian Gravias said school catchment zones, public transport and nearby shops were important features.

“Find somewhere that has great amenities and where there’s lots of parks and outdoor spaces,” Mr Gravias said.

He added a diverse spread of stock was more desirable than a suburb dominated by apartments.

Real Estate Buyers Agents Association president Cate Bakos said online tools like Google Street View allowed buyers to carry out a “virtual drive-by” of their target neighbourhoods.

Once they’d nailed down a location, househunters should start researching recent sales to familiarise themselves with prices in that area.

“Get on a ‘sold’ tab of a search engine (like realestate.com.au) and have a look at what the going rate is for the product you’re after in your suburb of choice,” Ms Bakos said.

Buyer’s agent and Real Estate Buyers Association of Australia president Cate Bakos.

Buyers have been advised to do their research before Melbourne opens up again. Picture: Daniel Pockett/Getty Images

“(Don’t) look at quoted sale prices as they can come unstuck, especially where auctions are involved.”

Ms Bakos said would-be buyers should also use the lockdown period to start talking to agents in the areas they were looking to buy into.

“Agents will have a bit of time on their hands right now, they’ll be pretty happy to hear from you,” Ms Bakos said.

Mr Gravias said buyers would ideally buy a house or townhouse to capitalise on price growth, but apartments were a cost-effective alternative to get into a prized suburb.

He added villa units were “amazing if there’s not that many on the title”.

“They’ve got very good bones, they were mostly built in the ‘60s and ‘70s so the workmanship is great and they can be renovated,” he said.

“I’d be looking to buy an apartment that doesn’t have many amenities so the owners corporation fees aren’t too big.”

Extra car spaces and outdoor areas were also desirable, Mr Gravias added.

Castlemaine Property Group agent Elouise Dale said buyers looking to move out of Melbourne should “do a lot of homework” on what their target region offered, to be ready to pounce once restrictions eased.

“Castlemaine, for example, has a train station, and the NBN services that whole Mount Alexander area,” Ms Dale said.

She said she’d seen a surge in demand and multiple offers placed on every property she had listed for sale between Melbourne’s two major lockdowns. The easing of this one would create “spring to the power of 10”, she predicted, meaning buyers should “be prepared to be competitive”.

For budding first-home buyers, the research process should also involve determining what grants were available to them, Ms Conisbee said. These included stamp duty exemptions on purchases below $600,000 and discounts for buys up to $750,000.

Amy Lunardi buyer’s advocate Amy Lunardi said buyers with secure income should start their property search as soon as possible, predicting “a flurry of activity” in the market post-lockdown.

—with Samantha Landy

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jack.boronovskis@news.com.au

@jackboronovskis

The post Melbourne stage four: How to get ready to buy this spring appeared first on realestate.com.au.

The Prospect property at 5 Te Anau Avenue was snapped up before auction. Pic: realestate.com.au

Fire damage did little to deter househunters from getting into a pre-auction bidding war for one Prospect character home.

The 1925-built bungalow at 5 Te Anau Avenue was snapped up before it had a chance to go to auction following strong demand.

Harris Real Estate agent Henry Gower Tillett, who sold the property with Georgie Todd, said they received multiple offers for the beloved family home before it sold for $868,000.

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It had been damaged by fire but that didn’t deter prospective buyers. Pic: realestate.com.au

The owners received multiple offers for the home prior to auction. Pic: realestate.com.au

“The competition drove the owners to accept an offer prior to auction,” he said.

“It was more sold as the land value.

“It gave buyers a chance to be able to get into such a tightly held Prospect market.”

Despite extensive fire damage throughout, Mr Gower Tillett said everyone who made offers saw the house’s potential and planned to breathe new life into it.

“People could see past the damage,” he said.

“While an unfortunate circumstance for the previous owners, they were excited to hear that a new family wanted to restore it to its former glory when it was cherished for years.”

It was on the market for two-and-a-half weeks before it sold. Pic: realestate.com.au

The property was on the market for two-and-a-half weeks before it went under contract.

On a sprawling 759sqm block, it has four bedrooms and two bathrooms, as well as two sheds and a tandem carport.

It had been modernised prior to the fire.

Mr Gower Tillett said it was a combination of the type of home and the suburb that made the property so popular among prospective buyers.

Latest realestate.com.au figures show Prospect’s median house price is $705,000.

It is on a 759sqm block and has four bedrooms and two bathrooms. Pic: realestate.com.au

The post Fire damaged Prospect character home snapped up before auction appeared first on realestate.com.au.

HOBART has outperformed Australia’s major capital city property markets, recording another small rise in median dwelling values despite COVID-19.

The city recorded a dwelling (house and units) value increase of 0.1 per cent in August despite a national decrease in values of 0.4 per cent.

Houses saw the biggest monthly increase, up 0.3 per cent, but a 0.7 per cent decrease in unit values clawed back the dwelling average increase, according to the CoreLogic Hedonic Home Value Index for August.

Melbourne, which is in the grips of a strict level four lockdown due to outbreaks of the novel coronavirus, saw a decline of 1.2 per cent (overall dwelling values) over the same one month period.

Sydney saw declines of 0.5 per cent, while Brisbane posted a 0.1 per cent drop.

The best performing city was Darwin, which saw values increase by 1 per cent in August, albeit of several years of declining values.

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CoreLogic’s head of research Tim Lawless said the performance of each housing market was “intrinsically linked with the extent of social distancing policies and border closures which also have a direct effect on labour market conditions and sentiment”.

“The Melbourne housing market is the main drag on the headline results,” he said. “Through the COVID period to date, Melbourne home values have fallen by 4.6 per cent.”

In Hobart, dwelling values increased 0.3 per cent over the last quarter and 5.5 per cent over the past 12 months, with median values (houses and units) reaching $490,743.

“Looking forward we are likely to see a diverse outcome for housing markets around Australia, depending on how well the virus is contained and the regions exposure to

other factors such as its reliance on overseas migration as a source of housing demand,” Mr Lawless said.

Tim Lawless

Tasmania’s borders have been slammed shut since March 19, with Premier Peter Gutwein recently announcing the moat would remain in place until at least December 1.

The state has just one active case – a man in hospital who returned from Melbourne after seeking medical treatment in August.

Low levels of cases and eased restrictions in many regional markets is just two of the factors holding up the smaller markets.

The data shows the best performing markets besides Hobart are Adelaide and Perth (0.0% change), Canberra (up 0.5%) and Darwin (up 1%).

All of those markets have zero or minimal cases and more freedoms.

Mr Lawless said regional markets also tended to be less reliant on overseas migration.

“Regional markets may also be appealing for their relatively low density and lower price points,” he said.

“The normalisation of remote work through the pandemic could make proximity

to major cities less of a factor in home purchasing decisions.”

Anecdotally, local real agents are reporting an uplift in interstate buyer inquiry, particularly from Victoria.

Petrusma Property Hobart/Sandy Bay managing director and auctioneer Sam Towns said he had sold properties to “plenty of interstate buyers”, with a number prepared to buy sight unseen.

He said border closures meant buyers were able to do virtual tours of homes instead.

“They are from all over (Australia),” he said. “I think people are seeing Hobart and Tasmania as a bit of a sanctuary.

“If they can’t move immediately, they are certainly wanting to make the move here one day.

“And if their job can be done remotely, that creates flexibility.”

Mr Towns said the key suburbs being looked at by interstate buyers were those closest to the CBD – West Hobart, Sandy Bay, Battery Point and the like.

He said Hobart offered great views, lifestyle, proximity to the city, lifestyle and relative affordability compared to the likes of Sydney and Melbourne.

Charlotte Peterswald for Property sales manager Debbie Heron said interstate buyer inquiries were “trickling in” but she expected that change dramatically once the border opened.

“Once borders open, the Hobart market will go ballistic,” she said. “In the interim, locals are taking advantage of less competition.”

CoreLogic Hedonic Home Value Index August 2020 – Change in dwelling values (houses and units combined)

The post Hobart defies COVID-19 odds to record price growth appeared first on realestate.com.au.

This waterfront mansion at 32-36 The Anchorage, Noosa Waters, has just sold for close to $12m.

THE spectacular Sunshine Coast holiday home of the man who built an empire on toilet brushes and brooms has sold for close to its $12 million asking price.

The 13-bedroom, 12-bathroom mansion at 32-36 The Anchorage, Noosa Waters, sets a new record for Noosaville, which is fast becoming the state’s hottest postcode with big money changing hands at a rapid pace.

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The wet-edge pool at 32-36 The Anchorage, Noosa Waters, is rather inviting.

The property known as ‘Hayven’ was owned by the late businessman, Donald Hay, who died from melanoma last year aged 76.

Mr Hay founded the company, Hayco, 35 years ago and built it into one of the world’s biggest brush makers — now shipping 200 million items a year to more than 60 countries.

Donald Hay, the late multi-millionaire businessman who founded the company, Hayco, specialising in brushes. Picture supplied.

Reed & Co. Estate Agents principal Adrian Reed, who negotiated the sale, said the property was “a timeless masterpiece”.

“It is one of the most extraordinary homes to be built in Queensland, where attention has been given to every detail and decision,” Mr Reed said.

The impressive architecture of the home at 32-36 The Anchorage, Noosa Waters.

Mr Reed declined to reveal the buyer or exact sale price, but said the property had attracted interest from New York and London.

The house can sleep up to 32 guests and features onsite caretaker quarters, a maid’s quarters, a 25-metre pool, a championship tennis court, a nightclub, a media room, a gym, a steam room, a four-car garage and a guest wing with eight bedrooms.

The sale of this property sets a new record for Noosaville.

A separate family wing of the home includes the master suite with his and her bathrooms and walk-in wardrobes, plus bedrooms for the children.

The house was designed by architect Shane Thompson and built in 2002 on a huge, 2976 sqm block.

Inside the home at 32-36 The Anchorage, Noosa Waters.

The property has a 60m water frontage and two private jetties.

The sale comes amid a flurry of transactions in the Noosaville 4566 postcode in the past month, as buyers flock to the lifestyle the idyllic area offers.

The tennis court at the property. Image supplied.

A four-bedroom, three-bathroom house at 27 Wyuna Drive recently sold for a cool $6 million.

Down the road, properties at 33 and 59 Wyuna Drive also recently sold for significant sums.

The view from the property at 32-36 The Anchorage, Noosa Waters. Photo supplied.

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