While being at home has just begun to become the new norm, we are now seeing empty streets and empty offices become busy once again due to the recent easing of restrictions. The lifting of restrictions has meant that on-site auctions are back in action and as a result, clearance rates have jumped. Does this mean a recovery has begun? What other impacts have the COVID-19 restrictions (and easing of restrictions) had on Australia’s property market? And, where to from here?
Auction Clearance Rates
According to a recent report by CoreLogic, the week ending the 10th of May delivered a final auction clearance rate of 50.9% across the country. This a is big jump from the clearance rate 4 weeks prior which was at just 30.2%. This is the highest clearance rate result since the week ending on March 15th, before the tightest social distancing measures were implemented across the country. The increase in auction clearance rates came as on-site auctions resumed in New South Wales from the 9th of May, while on-site auctions resume across most other states and territories this week. The number of listings recorded by real estate agents across the country was also up by 6% during the week ending the 10th of May. These indicators of improved buyer and seller activity come as consumer sentiment has made significant gains, according to Eliza Owen from CoreLogic.
Does this mean the property market has begun to turn around?
With an increase in consumer sentiment, along with many Australians taking advantage of cheap cash rates, we are seeing the beginning of an upwards turn for the property market. An additional factor that influenced the downturn of the property market has been the frozen flow of people to Australia. According to the Australian Bureau of Statistics, there was a 98.5% drop in visitors to Australia over April. This massive drop has undoubtedly had a big impact on the property market although, with the eventual lifting of travel restrictions, we will see a further lift in the property market. As restrictions continue to lift, we will see further improvements to the conditions across the board.
So, where to from here?
As restrictions begin to ease, as the implementation of promising policies and stimulus packages take place and, as more people return to work, the economy is on it’s way to recovery. Luckily, the COVID-19 pandemic crisis is not a financial crisis, and given that the banks remain healthy as economic activity continues to return to normal, the engines of growth will move more efficiently.
According to AustralianBroker, the NAB chief customer experience officer, Rachel Slade, has confirmed that hundreds of people over the past week have decided to reverse their home loan deferrals and resume making payments as life has begun to return to normal.
Once we see household incomes and jobs recovering more rapidly, as well as the return of people traveling into Australia, the property market will recover even more efficiently. The upwards turn is happening, and though it may be slow, keep your long-term plan in mind and remain positive as the market is in recovery mode. It is onwards and upwards from here.
https://www.pgaadvisory.com.au/ “Where To From Here?” / Carly Tomadin