26 May 2020
By Julie Wagner - Adelaide Bank
While little resembles pre COVID-19 life, Australia’s affinity for real estate continues to play a role in the path towards a new normal.
“I’ve had 7 new purchase applications out of 18,” said Tommy Nguyen, Director-Mortgage Broker at Loan Market, Erskineville, reflecting on the period March through to early May. “Those who have secure jobs are still looking for a good buy.”
And this is despite the fact asking prices are yet to show the declines predicted by a growing number of financial experts. According to SQM Research 2020 week ending 19 May 2020, the capital city average change in asking prices is up 10.8% for houses and 3.2% on this time last year.
SQM Research Weekly Asking Prices Index
Week ending: 19 May 2020
| Asking Price | Chg on prev week | Rolling month % Change | 12 month % Change | ||
| Sydney | All Houses | 1,388.3 | 9.1 ↑ | 0.7% ↑ | 14.0% ↑ |
| All Units | 706.7 | -1.2 ↓ | -0.2% ↓ | 3.6% ↑ | |
| Melbourne | All Houses | 1,043.9 | -1.0 ↓ | 0.3% ↑ | 11.9% ↑ |
| All Units | 563.4 | 0.9 ↑ | 1.0% ↑ | 4.2% ↑ | |
| Brisbane | All Houses | 639.1 | -1.2 ↓ | -0.5% ↓ | 3.3% ↑ |
| All Units | 373.3 | 0.5 ↑ | 0.2% ↑ | 0.4% ↑ | |
| Perth | All Houses | 664.5 | 5.1 ↑ | 1.6% ↑ | 0.5% ↑ |
| All Units | 376.1 | 1.5 ↑ | 0.8% ↑ | -2.2% ↓ | |
| Adelaide | All Houses | 526.9 | 1.2 ↑ | 1.6% ↑ | 2.7% ↑ |
| All Units | 308.0 | 0.5 ↑ | 0.4% ↑ | 2.4% ↑ | |
| Canberra | All Houses | 824.3 | -1.6 ↓ | 0.4% ↑ | 2.0% ↑ |
| All Units | 439.1 | 2.7 ↑ | -0.7% ↓ | 2.9% ↑ | |
| Darwin | All Houses | 575.1 | -3.5 ↓ | -1.8% ↓ | -2.7% ↓ |
| All Units | 336.5 | 14.5 ↑ | 4.3% ↑ | -5.8% ↓ | |
| Hobart | All Houses | 568.1 | 2.2 ↑ | -2.1% ↓ | 10.0% ↑ |
| All Units | 347.5 | 7.5 ↑ | -2.8% ↓ | 15.0% ↑ | |
| National | All Houses | 598.2 | 1.2 ↑ | -0.2% ↓ | 5.6% ↑ |
| All Units | 390.1 | -1.3 ↓ | 0.2% ↑ | 4.0% ↑ | |
| Cap City Average | All Houses | 999.1 | 5.3 ↑ | 0.9% ↑ | 10.8% ↑ |
| All Units | 575.6 | -1.4 ↓ | 0.3% ↑ | 3.2% ↑ |
Furthermore, April’s miVoice survey of Bendigo and Adelaide Bank customers indicated that 30% of respondents do not intend to defer their plans to sell or buy a home this year.
So, who is buying property right now?
Aaron and his partner, from Queensland have been lucky enough to keep their jobs despite the pandemic. They settled on their new home in April after missing out on two homes they’d made offers on earlier in the year.
“The house [we eventually bought] had 8 signed contracts as well as 3 expressions of interest,” explained Aaron. “We didn’t end up being able to inspect due to the sheer volume of offers, but we did do a couple of drive-buys. If real estate has been negatively impacted by the virus, we didn’t see it.”
Karen, from Adelaide’s south-western suburbs, shared a similar experience.
Karen has forged ahead with plans to find a new home (with her children and partner of 2 years). She recently signed a contract for the sale of her existing home and is committed to buying a new house as soon as she finds “the one”.
“Selling took longer than I’d hoped because in the second week of our sale campaign, open inspections were no longer allowed,’’ explained Karen. “I had quite a few private inspections, but nothing that turned into a sale. I thought it was because buyers weren’t out there. But then, on the first weekend we held open inspections again, we had 3 interested parties and signed a sales contract.”
Karen’s been looking for a bigger place, closer to the beach since mid-March.
“I thought it would be easy,” she said “but we’ve missed out on a couple of properties we made offers on. Buyers are definitely still out there.”
Recent Adelaide Bank loan application activity also reflects a continued appetite for real estate, despite the environment.
“After seeing a sharp decline in purchase applications at the height of COVID-19 concerns in March… applications for [owner occupier] purchases are stronger than ever,” explained Amanda James, Adelaide Bank’s head of broker distribution. “Investment purchases have also seen an increase in May, [although] not quite at the levels we were seeing pre COVID.”
It appears that fixed rates are the preferred option for most buyers.
“New applications for purchases with fixed rates have doubled from around 30% to 60% of all applications, with applicants taking advantage of our record low fixed rates.”
Although the first half of 2020 brought about a tectonic shift in the way we live, our nation’s penchant for real estate appears to be maintaining its hold. At least for now. This, combined with the challenges facing existing homeowners, signals a busy year ahead for the mortgage industry.
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