The business restrictions and rising unemployment are affecting consumer sentiment and outlook on the real estate market, with many struggling to cope with these unprecedented circumstances.
Property market experts are looking at many different indicators to determine the performance of the real estate market, from auction clearance rates, price data, amount of the loans being taken to finance housing and most importantly consumer sentiment.
But none of these indicators currently instils confidence in present circumstances, leaving stakeholders to wonder what’s going to be the economic cost of the ongoing health crisis.
- Buyer inquiries have fallen sharply
- Vendors are finding it difficult to sell their properties
- Loan approvals have also witnessed a "sharp decline"
Melbourne-base property owner Upkar Singh had put his house on the market two months ago but is still awaiting a buyer.
Speaking to SBS Punjabi, Mr Singh claims 17 potential buyers had come to inspect the property when it was first listed, but the coronavirus outbreak put a dampener on his plans.
“When I had my house on the market two months back, on the first day I had seventeen people who came for an open inspection. But due to the instability caused by a coronavirus, not even a single person has come to have a look at my property in the last three weeks," says Mr Singh.
The latest figures indicate that there has been a surge in the number of properties for sale in Victoria in March, which are 10 per cent higher than the same time last year.
Hardeep Singh, a real estate agent in southeast Melbourne says that's because many vendors are rushing to sell their properties in an attempt to "cash-out," but the uncertainty of the outbreak and the corresponding economic fragility has weakened the demand in the market.
"There has been an 80 per cent decline in the inquiries from potential buyers in the last two months alone. But at the same time, there has also been a significant drop in property values.
"This means genuine buyers are still scouring the market as long as there are good properties available. And some of these property owners are still managing to sell their properties at desirable values," says Mr Singh.
One such "lucky" owner is Manpreet Singh Khangura who managed to sell his house "just in time," three weeks ago.
“Initially it was very discouraging when nobody turned up on the first day of the property inspection. Even the following week the only person who came to view the house was my neighbour," says Mr Singh.
But then one phone call from his agent changes his fortune.
“I was very anxious and was seriously considering lowering the reserve price of the house by $20,000. But then everything changed with one phone call from my agent, who said he had a buyer who was happy to pay 20 thousand more than the reserved price," he says.
Hemant Solanki, who is a conveyancer claims there is no denying the fact that there has been a significant pullback by buyers, which can also be attributed to the fact that the banks have tightened their clutches on loan approvals.
"There is approximately 30 to 40 per cent drop in land settlements as there are delays in getting the finance approvals from the banks”.
Simar Singh, a lending consultant based in Melbourne says the scenario was "unfortunately not uncommon."
“Banks have become more anxious about valuations of particularly off-the-plan properties (yet to be built) and surveyors too are erring on the side of caution owing to a downturn in the market.
“We are witnessing a significant undervaluation of properties in Melbourne and at least three out of ten buyers in the area are battling lower valuations because most of them purchased at the peak of the property boom,” says Mr Singh.
But it's not just buyers or sellers who are feeling the pinch.
Sukhpal Singh, who works as a mortgage broker, says he too is "struggling" to cope with the sudden loss of business.
“I used to write 2 to 3 million dollars worth of loans till the end of February, but due to the uncertainty created in the real estate market and in this period of economic sluggishness, I have not even managed to secure a single home loan application in the month of March," says Mr Sngh.
Click on the player above to listen to the interviews in Punjabi.
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