Australia

Is buying a house during the coronavirus crisis a good idea?

Real estate agent Adrianna May at a newly sold property in Cronulla, NSW. Source: AAP

House prices continued to rise in April but there are signs the market is running out of steam. For those buying and selling homes, there are also virtual tours and online auctions to get to grips with.

Henry* just bought a multi-million dollar home, without ever stepping inside it.

His real estate agent Lisa Davies, from Ray White, said it took all of 30 minutes.

"We went straight onto FaceTime and just went room-by-room through the property. It was surprisingly easy," she told SBS News. 

"He seemed to have just fallen in love with that property from the moment that he saw it." 

Moving house is deemed an essential activity under the lockdown measures passed by the federal government to prevent the spread of coronavirus, but open-house inspections and auctions have been banned for some weeks, forcing agents like Ms Davies to get creative.

Acacia Gardens, North-West Sydney
Despite a drop in market activity, house prices in Australia haven't fallen.
Getty Images

Virtual tours of properties, where agents use their phone to live-stream a property to a potential buyer, are being used widely across Australia, while physical house inspections are being limited based on the latest instructions around gatherings.

Open house inspections will begin again this weekend in some states, with potential buyers asked to adhere to social distancing guidelines.

Is now a good time to buy a house?

Rising unemployment due to COVID-19 has led to fears of weak housing demand and falling property prices. 

The number of settled property sales in Australia plunged by about 40 per cent in April, but it hasn't translated into a fall in house prices yet. 

Darwin posted a house price gain of 1.7 per cent for April, while Sydney and Adelaide saw a more modest 0.4 per cent increase. Canberra remained flat, while Hobart and Melbourne both had small falls. 

Part of the reason is that listings have also dried up in the climate of uncertainty, while offers of assistance from banks have also helped.

CoreLogic
CoreLogic

While virtual tours have been successful for some, they may not be enough for everyone, according to the director of the Real Estate Institute of Australia, Adrian Kelly. 

“The reality is that most states have shut their borders and most buyers want to touch property physically before they handover a significant sum of money,” he said.

But less competition in the market may offer an opportunity for those in a position to buy property in Australia.

"If you still have employment and the capacity to borrow money, interest rates are still very low, almost zero, and with a lot of buyers now sitting on their hands, I would have thought that now is probably a good time to start buying something,” Mr Kelly said.

How might COVID-19 affect lending? 

Mr Kelly said it is important to exercise caution and avoid rushing into any deal, keeping in mind buying a home will be one of the largest investments individuals will ever make in their lives.

"Every buyer has got ample opportunity to do the proper inspections, to be able to do private inspections one-on-one, with the agent. First homeowners, like always in any market, need to do the research, make sure their finances are in place and see as much property as they possibly can," he said.

“This market doesn’t put any extra pressure on buyers at all really. It gives them a good opportunity to still do the work they would have done before.”

CoreLogic

 

Mr Kelly said buyers should actively engage in the property market, being wary of unforeseeable changes related to COVID-19, in the future.

He urged buyers to check any agreements made with banks before COVID-19, which may have changed under new circumstances.

Some banks have issued stricter guidelines for clients in high-risk industries - such as retail and hospitality - trying to secure home loans or mortgage deals, but they are also stepping up to support those who own property. 

"I think what has been most important is probably the reprieve that's been offered on mortgage repayments by the banks," said Eliza Owen from property market database CoreLogic.

"This has probably stopped people being in a more distressed financial situation." 

How do I view properties?

Managing Director of Ray White Real Estate, Dan White, said virtual tours have been a success.

“It’s like a full, warts and all inspection that you’d want to do if doing it personally, and interactive as well," he said.

"It’s amazing how good the agents have become at doing the inspections virtually and how much buyers seem to like doing it.” 

Principal agent at Belle Property Neutral Bay, Mark Jackson, said the one-on-one appointments are resulting in a higher turnout of serious buyers, rather than some 30-40 people visiting a property throughout the week.

“You’re finding that people who do come and inspect the property, they have a much higher level of being a serious buyer. The quality of the buyers has increased,” he said.

What about auctions?

Some real estate companies are hosting auctions online.

Real estate agents at Ray White have been hosting Google Hangouts conferencing sessions, allowing bidders to place bids for properties by stating their ‘paddle number’, followed by their offer, or by typing the figure in the chat bar function.

NSW auctioneer Jason Andrew hosting an online auction.
NSW auctioneer Jason Andrew hosting an online auction.
Supplied

Mr White said the auction team has seen a jump in the number of registered bidders per auction this year, increasing from 2.5 to 3.9 bidders for each auction.

“Our clearance rates at auctions [on a recent weekend] were actually a little bit better than this time last year,” Mr White said.

Is now a good time to sell a house?

While listings are low, industry representatives say buyer activity has been high.

Mr White said the Ray White website has seen a 20 per cent jump in online buyer activity on its listings since January.

He said vendors have been holding back due to the uncertainty of COVID-19 but believed once they see increased activity from buyers they may be more willing to put up listings.

“Because it happened so fast, overnight, people [vendors] had no choice but to continue on and most of them have been pleasantly surprised how well it's gone. So what's coming to market is getting good responses from buyers. And I think that's happening more and more.”

Belle Property’s Mr Jackson said the market is "a lot better than what people are expecting".

“It’s not great by any means but there are definitely people out there that do want to buy. And that’s probably driven by different regions and areas. Certainly, on the lower north shore [of Sydney], it’s going reasonably well considering what we’re dealing with,” he said.

“People do need to buy and sell, due to personal circumstances like families growing up, or people leaving home, people getting married - and they’ll continue.” 

What should I be doing if I’m renting?

Renters who have lost work due to coronavirus pandemic are covered by protections varying from state to state.

Prime Minister Scott Morrison announced a six-month freeze on evictions from homes and businesses in March, with funding and details determined by states and territories.

Since then, various states and territories have unveiled financial packages and laws of their own to assist landlords and tenants.

Signage for a property in Carlton North, Melbourne
Australia's states have announced measures to help protect renters.
AAP

“We would have liked to have a national framework in place," Mr Kelly said. 

"What might be happening in NSW, could be quite different to what’s happening in Western Australia. So tenants or home-buyers should be taking advice from regulators in each state, as the rules are quite different.” 

The Australian Securities and Investments Commission also advises consumers to get advice from qualified and licensed financial advisers, not real estate agents.

The watchdog said real estate agents may face up to five years jail if they ask tenants to withdraw their superannuation - now permissible under recent laws - to cover rent.

Is now a good time to rent out my property?

The NSW government advises landlords to ensure social distancing measures are met when inviting potential tenants into the home for inspections, or host online inspections instead.

Landlords are also advised to consult tenants about postponing non-essential repairs, maintenance or inspections. 

Landlords and tenants can seek more advice from unions in their state, such as Tenants Victoria, or the NSW Government Fair Trading website.

Individuals can also seek advice from the Real Estate Institute of each state, such as the Real Estate Institute of Tasmania.

Despite uncertain times, Mr Kelly is optimistic the housing market will experience a resurgence towards the end of the year.

“We feel that it's likely that there are some areas around Australia that will come back with a vengeance. Especially those tourism hotspots such as Tasmania, Queensland, those sorts of areas.

"We're likely to see Australians who want to get out of their house, who have been locked up for a while, will travel around Australia."

Mr White shares his optimism.

“I think more stock will naturally come on the market in the next six months. It will take some time, but it will happen,” he said.

*Name has been changed

People in Australia must stay at least 1.5 metres away from others. Check your state’s restrictions on gathering limits.

Testing for coronavirus is now widely available across Australia. If you are experiencing cold or flu symptoms, arrange a test by calling your doctor or contact the Coronavirus Health Information Hotline on 1800 020 080.

The federal government's coronavirus tracing app COVIDSafe is available for download from your phone's app store.

SBS is committed to informing Australia’s diverse communities about the latest COVID-19 developments. News and information is available in 63 languages at sbs.com.au/coronavirus

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