The COVID-19 outbreak has shown how a single crisis can topple the momentum of a thriving property market. However, one expert says there are ways real estate agents can remain happy and resilient amid the uncertainty.
The coronavirus crisis has dampened growth projections in Australia’s property market, which was primed for an upsurge before the pandemic reached its full force. Consequently, no one was spared as both sellers and buyers felt the impact.
“At the beginning of the COVID-19 pandemic, there was a significant amount of uncertainty from both buyers and sellers nationally,” says Mark Armstrong, chief executive officer and co-founder of real estate website RateMyAgent.
“The decreased sense of job security, increase in staff layoffs, and strict physical distancing measures meant buyers and sellers effectively paused any plans they had to buy or sell – out of fear that this was in fact, a terrible time to enter the market.”
Armstrong also admits that vendor and buyer confidence has sunk to an “all-time low” as auctions were cancelled, inspections were banned with no indication of resuming, and the Australian economy experienced a significant slowdown across most sectors.
Seller satisfaction declines…
The uncertainty has resulted in a 5% drop in seller satisfaction in April, after a promising 17% rise in the first quarter of the year, according to RateMyAgent’s latest report.
The decline was most significant in metro areas, with the sector’s biggest markets Sydney and Melbourne recording respective decreases of 16 and 10 percentage points. Regional areas in Queensland and Victoria also reported a dip in agent happiness, albeit not as sharp.
Armstrong says “higher expectations on how much a property ‘should’ sell” have largely contributed to vendor dissatisfaction in capital cities.
“This high expectation is to be anticipated and comes from sustained and extended periods of growth in property value over recent years, especially in the Sydney and Melbourne markets where growth has been steadily increasing,” he says.
“Receiving a lower price than expected will be psychologically more difficult for vendors in this market to accept, whereas regional markets are more likely to still be satisfied with their home sale price in the event of a market downturn such as the COVID-19 pandemic.”
… but not as bad as expected
While agent satisfaction decreased in many areas, Armstrong says the drop was not as severe as anticipated, indicating the property market’s resiliency.
“If you consider the low level of supply through April and May because of COVID-19, it’s incredibly likely that the market will bounce back in the coming months,” he says. “The sellers who hesitated to list their property on the market will begin to do so in the coming months, and with that will come a potentially aggressive over-supply in spring.”
“The good news for buyers is that with higher supply comes lesser competition. Market data showed a slight drop in house prices in April, which is a great indication to buyers that they should definitely be looking to buy now.”
Armstrong also says that current economic conditions indicate that now is the perfect time for vendors to enter the market.
“Consumer confidence is improving, restrictions are easing, and interest rates are at an all-time low – now is a great time to sell,” he says. “We’re anticipating that we will see a fully supplied market moving forward based on 20% less property being sold at this time [compared to] 2019.”
Armstrong says the market holding back in terms of supply moving forward was unlikely and advised sellers “to get on the market while competition is down.”
How agents can become “undisruptable” in an ever-changing property market
One thing the COVID-19 pandemic has taught property sellers is the value of adaptability and resilience in an uncertain economic landscape.
Armstrong, however, emphasises the importance of proper communication to being adaptable.
“It’s important that agents remain socially connected, [both] online and in real-life, and continue to nurture and build relationships with clients,” he says. “Now more than ever, it is important for agents to be adaptable, agile, and focused on delivering high-quality results to buyers and sellers.”
Armstrong says he expects some reluctance from both buyers and sellers as the market slowly reopens – and this is where open communication can do wonders.
“Buyers and sellers will be nervous, so it’s important that agents are able to re-instil a sense of confidence and optimism among their clients. The best way to do this is to maintain a robust sense of trust and communication by keeping in regular contact with vendors.”
What does the future hold for Australia’s property market?
Armstrong says a solid recovery for Australia’s property sector is expected as restrictions begin to ease, and buyer confidence increases.
“April was the absolute height of uncertainty for the Australian property market – there is no disputing that,” he says. “However, the good news is that we’re already seeing increased clearance rates across all markets, the return of auctions and rental inspections, and decreased uncertainty around the COVID-19 pandemic.”
Armstrong says he is anticipating a “strong bounce-back” in buyer and seller confidence in the months ahead and that “the real vendor satisfaction test to come in spring” when the market “tend[s] to see larger levels of property supply as the weather warms up.”
“Our prediction is that we will see a full property market nationwide this September, as pent-up demand and withdrawn supply flood the market,” he says.