How will the Covid-19 virus impact property in Aus?
Our landscape started to change dramatically on Friday 13th March. The p word, (pandemic) marked a significant change for us all in terms of how we categorised the threat of the Covid-19 virus, and namely, it’s rate of spread, threat to our health system capability and ability to bring communities to a temporary stand-still.
Multitudes of industries have been and will be negatively impacted in the short to medium term, but humans are a resilient bunch. What we are learning about ourselves and our adaptability is intriguing.
Banks, multinationals and large corporates are tag-teaming staff office days with ‘split shift’ teams who alternate donning a suit and working in the office and working remotely from home in their pajamas. Organisations are trialling full IT work-from-home arrangements and client-facing businesses are adopting meeting interfaces for online conferencing. Coffee catch-ups are even evolving as a networking facetime exercise, where parties are greeting each other on a screen each with a coffee cup in hand.
It seems that we’ve been thrust into a situation where social conformity, respect for our fellow workers/customers, and a reliance on evolving from traditional business face-to face culture to a combative, online option must become our new norm.
But in an industry that has risen above online disruptors in the name of personability, how can real estate salespeople and vendors alike achieve their desired outcomes when the traditional opportunities to attract and canvas buyers are under threat?
Agencies are releasing public announcements to remind buyers of their self-isolation requirements if they’ve either returned from overseas, experienced flu symptoms or have been in contact with someone diagnosed with the virus. Some agencies have made the decision to lock their doors and schedule visitors strictly by appointment, while others have stated their cleaning and disinfectant policy openly, with reference to the management of sanitisation of signboards, phones, door handles, desks, etc.
Plenty of agents this week will be greeting buyers at privately scheduled inspections in jeans or gym wear, with a spring in their step and a friendly reminder that they are now ‘mobile’ and working from home. Some agencies are proposing online auctions and our ability to electronically execute contracts is now pushed to extremes.
We’ve all been reminded when we break recent protocol as we’ve outstretched our hand in that oh-so-familiar way to greet people that we can now nudge elbows, (or smile awkwardly and make a passing comment about an appropriate distance). And we have certainly fielded questions from anxious vendors, buyers and staff who are critically aware of the Government’s suggested ‘social distancing ’as they’ve prepped properties for OFI’s and wondered what sort of headcount a house can hold with this recommended 1.5m distance in mind. Is it ten people at a time? Five people in an apartment? The questions continue.
What we haven’t really talked about yet is the impact on vendor activity and listing numbers. As we saw during the 2017/2018 downturn, the only vendors who decided to sell during this time were the vendors who had to sell. Others sat it out and waited, putting off their decision to sell until the market conditions showed firm signs of improvement. Our downturn lasted for well over a year, and in the early stages of the market recovery, (particularly in Melbourne and Sydney), our stock shortage prompted what can only be described as one of our most aggressive market bounce-backs.
In tandem with consecutive rate cuts, easing lending policy and a surprise election result, the stock shortage fuelled what can only be described as a strong seller’s market in our eastern capital cities. The COVID-19 outbreak has every ability to spook vendors and slow down our stock levels once again. We are already seeing vendors rescheduling and postponing auctions, even as early as one day after the World Health Organisation’s announcement of a pandemic.
What could a stock shortage do to our supply and demand ratio in the coming months?
Buyers who had a desire to purchase advantageously in a down-market, yet lacked courage to take the leap before evidencing a rebounding market were plentiful, and many were despondent about ‘missing the boat’.
The recent and dramatic challenges we face are already completely different to our last market downturn. In the event that this COVID-19 shakeup is relatively short-lived, the question must be asked; which buyers are feeling opportunistic? And for those who ‘missed the boat’ a year ago, are they prepared to try to catch the next boat?
For those buyers who have finance in place, buffers on hand and conviction of their long term strategy, is this situation a glass-half-empty, or a glass-half -full?