Stage 4 restrictions: how does this affect buyers?
Stage 4 Restrictions and Its Effect on Buyers
For most Victorians, the last week has been the strangest week of our lives as we familiarise ourselves with curfews, limited outings and the, hopefully only temporary, closure of work places, including the real estate industry.
Our thoughts are with all those who are finding themselves in a position of insecurity as a result of the closures and we hope for a speedy improvement to the current COVID-19 situation.
Closer to home, there are vendors who have recently sold and were planning on buying or renting something to move into when they settled, who now find themselves unable to inspect anything. Equally, some buyers have bought with the intention of selling their current home and find themselves in the stressful position of possibly holding two homes.
For those buyers, sellers and renters who have already entered into contracts, it may come as a relief that activities relating to moving can still take place; however, for those buyer/sellers who may be caught out as above, it is likely only to add to the stress.
New property campaigns expected to slow down
Although we saw a sprinkling of new properties hit the net last week, we don’t expect to see many new properties launch sales campaigns over the next few weeks, particularly whilst the uncertainty about when and how inspections will resume, remains. Many of these are advertising ‘contact agent to arrange an inspection’. Perhaps they were pre-programmed to hit the net before the shutdown, but with all inspections banned, we’re not sure how many buyers would want to buy a home sight unseen. From experience, many look better online and avoid showing any of the weaker features.
We anticipate the second half of this lockdown will become a little more active. While agents won’t be able to view properties before listing them for sale, many vendors may be comfortable to sign and prepare so they are ready to go as soon as they are allowed.
We anticipate an increase in the number of off market properties when the rules relax and the possibility of homes selling with only one or two buyers through, if the price is right for both parties.
Why the number of off-market properties is anticipated to increase?
- For those wanting to sell quickly, there will be time to prepare contracts and section 32 statements (many solicitors/conveyancers will still be able to work from home) before anyone comes through, so the home will be ready to sell straight away if a buyer is found.
- For those wanting a public campaign, unless the marketing steps (photography, copy, staging etc) were pre-prepared prior to the lockdown, this will still need to be done and takes time, usually about a week, and possibly longer if the number of sellers starts to increase.
Buyers can use this time to prepare
The biggest constraint for buyers when they find the right home is underestimating the time it takes for finance approval, particularly if you have a complex income/tax structure. Again, this is something that can be done from home and the banks and many mortgage brokers will be able to assist you remotely.
In addition to obtaining finance, it is worth considering the time between purchase and settlement as bank requirements are changing daily. If you’re considering a long settlement, finance approval granted now may not be approved come settlement time.
How it will affect the market
The market when it returns is perhaps a bit more uncertain. Six weeks is a long time. Will it hold the strength that was still around (for the good properties), as late as last week? We anticipate a slowing in the number of international and interstate buyers coming into the market as they will be unable to visit to view properties.
This reduction in buyer demand may create a more balanced market (ie. the gap between the number of buyers and sellers levelling out), with a more even number of homes for sale and buyers looking.
Some areas, however, may still see increases in demand. Speaking with agents over the last month, we note in particular the number of buyers who have purchased in the bayside suburbs of Brighton, Hampton and Sandringham, from areas such as Balwyn, Glen Iris, Carnegie, perhaps searching for a more relaxed lifestyle location.
In the meantime, we hope everyone makes it through the next six weeks safe and healthy.
As WoledgeHatt, we are ready to answer your questions and guide you through the problems and concerns you might have during this time. You can call us on 03 9509 7258 or contact us by filling out the contact form here.