Reside or invest amid pandemic and housing affordability decline

The recently released ANZ Corelogic Housing Affordability Report showed the wide scale decline in housing affordability with the ratio of housing values to household income reaching a new record. This was coupled with the number of years it takes to save for a deposit and the ratio of income to rent.

Buyers in regional Australia have been particularly strained due to the effects of COVID-19, with remote work trends and appealing coast and tree changes have become the new normal, and raised regional investing and purchasing to new levels.

Migration from cities to regions increased almost 6% by March 2021, and was up 14.3% from the decade average compared to a 3.5% decline leaving regional Australia to capital cities.

Eliza Owen, Head of Research at Corelogic said where a loss of momentum across capitals was usually matched by easing growth of regional Australia there has been a clear divergence in recent months. This was probably due to major cities coming out of lockdowns & the easement of social distancing and travel restrictions.

“Interestingly, the latest CoreLogic home value index results show that dwelling value and rent growth across the regions shows no sign of slowing just yet. Over November, dwelling values in regional Australia increased a further 2.2%, up from 1.9% in the previous month, and twice the monthly growth rate of capital city markets in November.”

MCG Quantity Surveyors recently conducted their latest Property vs Postal survey highlighting the increase in remote and borderless investing due to the global pandemic. The study indicated investors had ‘doubled the distance’ between where they live and where they invest.

Mike Mortlock, managing director of MCG Quantity Surveyors, compared the buying habits of their investor clientele for 2020 and then again in the year to November 2021 showing the average distance from investor home to investment property had risen from 294km pre-COVID to 559km over the pandemic period.

“Rather than going to ground during lockdowns, it seems investors looked for real estate opportunities further from their home suburbs than ever before.

“What’s perhaps most telling is the rapid increase in those looking for assets positioned exceptional distances from their home.

“Buyers investing in locations more than 200 kilometres from home rose from 29.5 per cent in January 2020 to 44.65 per cent in November 2021.

“Even more dramatically, the percentage investing more than 1000 kilometres from home more than doubled during the period.”

Property vs. Postal

*Principle place of residence. Source: MCG Quantity Surveyors.

Only 6.75% of Australian-based investors bought within their primary residence suburb, with most popular investment destination being Queensland with over 37% of investors buying in the sunshine state.

Mr Mortlock said a range of factors had made distance buying an attractive option.

“Firstly, lockdowns and economic uncertainty during the pandemic has had Australians thinking long and hard about their financial situation, so investing has been front of mind.

“Technology makes it possible to buy property from the comfort of a locked-down home. Modern day investors see the whole of Australia as a potential market – not just their state or city.

“Also, the surging popularity of regional relocation in this remote working world has boosted those property markets. Capital growth rates in many regional centres rivalled big cities in 2021, and investors want to get a piece of this action.” 

Purchasing properties ‘sight unseen’ has become more prevalent with the ease of engaging local buyer’s agents in the suburbs you want to invest in, regardless of where you live. An upswing in buyer’s agent engagement amongst investors has shown the they rely on advice on where and what to buy, the facts and figures and less about the emotional connotations of location.

Julie Kelley, Buyers Agent at Aussieproperty.com has noticed the increased demand for buyers agents from not just international/expat buyers but the local market, with residents from WA, VIC and NSW all showing interest in QLD properties.

‘I’ve had cash buyers ready to purchase apartments without even seeing a picture, let alone getting a local walkthrough of the property.”

Whilst based on the west coast, with a vast network of professionals around Australia Ms Kelley has been able to get local agents to provide walkthroughs and conduct due diligence on behalf of her clients.

“We are able to get offers done faster than ever before because the interest and subsequent trust of Buyer’s Agents has certainly been evidenced,’

“I’ll work with one client, and within a week or two of settlement I’m getting a call from one of their referrals for assistance, as well as assisting with property management and future investment planning”.

What many are now speculating on is whether this trend will be sustained once borders reopen and life returns to pre-pandemic ‘normal’, its only a matter of time to see what happens.