The hurdles of last year were turning hazy in the distance as the property market peddled on towards a full recovery – with housing values across Melbourne, Brisbane, Adelaide, Canberra and Hobart knocking on the door of their September 2017 peaks, as per CoreLogic’s Home Value Index for February.
But for many who had recently planned to buy, or sell their properties during an opportune phase, plans had to be swiftly diverted.
With optimistic market forecasts now being forced into a corner by COVID-19, the industry has been fast to turn to technology in a concentrated effort to adapt to the government’s strategy in curbing the spread of the virus; which included a momentary ban being placed on public auctions and open houses.
REIA president Adrian Kelly supported the government’s measures that came into effect on March 25 and in a statement said, "With regard to public auctions, these can still occur via telephone bidding or by using one of the many online auction platforms available.”
Domain figures reveal that out of 1,248 public auctions that were scheduled in Melbourne for the second Saturday since the government’s announcement, 65% converted to private treaty and a shy 6% moved forward with an online auction. Tech-sentiments were a little more optimistic in Sydney – where out of 1224 schedule public auctions, 21% went online and 36% switched over for private sale.
Despite the initial hesitancy for an online auction, there were a handful of successes. This included an online auction for a property in North Ryde that had only grazed the market for a week before being sold to a bidder for $1.755m on a Thursday, Domain reports.
Director of Results Mentoring, Brendan Kelly, says as a society we have already been moving across to a “more online and virtual world of transactions” – a trend which he expects will evolve over time.
“The pandemic and social distancing has simply accelerated, by a decade or two, that which was already underway,” he says.
The market of tomorrow: How will the coming weeks shape up?
President of REINSW, Leanne Pilkington, shares that new listings continue to come onto the market during these times.
“Some agents will still be comfortable in the [online] auction process and others will go towards private treaty,” Pilkington says.
Many agents have recently reported a large number of listings coming onto the market in September, she adds.
“But what we all know is that when there is a lot of stock coming onto the market at the same time, it’s good for buyers but it’s not good for vendors,” Pilkington notes.
The demand-supply playfield of the near future is one of the reasons why agents are having conversations with their vendors about how they could likely be impacted if they postpone selling.
“Particularly if it’s a property that they know is desirable and it’s priced according to the market, they are still putting them on the market,” Pilkington shares. “One [estate agent] signed up three new listings last week, and another one had three deals that they negotiated, so there are still transactions happening.”
Since the onset of the virus, the industry has progressed through a number of stages before reaching “planning mode”, Pilkington shares.
“I think we have moved through those stages really quickly, and I think that now we are looking for opportunity,” she says.
There are many times when the industry has shown for its capacity to gather its resources and weather storms that had been brewed by greater economic turbines; some markets across the nation withstanding the battering better than others.
In saying this, once the current crisis passes, could the industry’s shared movement into technology extend into being more than a temporary iso-buffer?
A surge in digital demand signals a lifeline to vendors
The morning after the government’s announcement, SoldOnline swept in over a 1000% increase in interest as the online property auction and bidding platform teamed with 35 property agencies and two leading commercial agencies to move their auctions across to online.
In a video address, ‘how to keep selling amidst the scare’, auctioneer and founder of SoldOnline, David Scholes, says: “We are surrounded by uncertainty and many agents are worried about the future of real estate sales…We have the perfect process to create a transparent competitive environment ensuring property owners and buyers are free from the potential of unwanted external forces.”
In the wake of COVID-19, a property located in Fairlight was listed on SoldOnline’s platform on behalf of estate agents Rightside Manly. There were 11 active bidders registered and the property flew under the hammer for $853,000, significantly over the reserve price.
“We didn’t consider a worldwide viral infection when we designed our concept. We designed it as a cutting-edge alternative to the traditional methods of real estate sales,” Scholes says.
The mainstream adoption of digital and virtual technology has been part of a broader industry vision for Harcourts Estate Agents also; having already taken successful strides in the past twelve months in connecting international clients from the U.S. to the Australian market through an operating online auctions platform.
In a media address, CEO of Harcourts Australia, Marcus Williams, says: “Because of the technology and training developed around online auctions combined with our in-house technology and development team at our disposal, we were able to quickly resource Australian agents.”
He adds, “In just over two weeks of online auctions being mandatory practice for Harcourts franchises, we have seen terrific success for our clients.”
The effects of auction withdrawals over the short-term
As per CoreLogic’s March Quarter Auction Review, the combined capitals saw clearance rates hit 37.3% in the last week of the month.
“There are various pressures that have led to a decline in the March quarter auction result,” CoreLogic’s head of research Australia, Eliza Owen, commented in the report.
“The banning of onsite auctions and open homes have physically prevented some auctions from going ahead or prompted vendors to pull out of the market. Withdrawal rates surged from an average of around 6% to 50.2% in the week ending 29th of March.”
CEO of Metropole Property Group, Michael Yardney, says it shouldn’t be forgotten that many properties that were initially scheduled for a traditional auction have re-entered the market as private sales.
“Currently the full effect of the coronavirus fallout has not hit our property markets and well-located properties are still selling at or before auction,” Yardney says.
“There are still some nondiscretionary sellers and buyers who must transcat. There are many people who sold their home and need to buy a new one while there are others who bought a home and looking to sell their existing property.”
While CoreLogic’s March Quarter Auction Review states that the next few months are ‘likely to see substantially fewer auctions than normal’, the report also mentions some of the leading platforms that vendors who proceed with a tech-led auction could likely adopt – followed by ‘watch this space’.
And largely, that’s all we can do as the industry navigates the current pressures that are being brought on by the worldwide pandemic.
As the first reaction of most vendors to the public auction ban led to a hike in private sales, digital apps began to pave the way forward to ensure that vendors, buyers and estate agents remain equipped.
One of these booming apps is Gavl; a digital-alternative to every facet of a property’s change of hand, from live-streaming a property and electronically submitting an offer, to broadcasting auctions in real time and signing agreements. More recently, the app announced its integration with Realestate.com.au.
In a media address, co-founder and CEO of Gavl, Joel Smith, says, “Although many auctions were pulled last weekend, we were able to play our part in allowing buyers to digitally attend and bid at auctions safely.”
Of the auctions that went ahead on Gavl many had welcomed over 250 viewers on the app, which Smiths says was “many more than there would have been expected in person in normal circumstances.”
“And they weren’t just watching,” he adds. “We had over 60 approved bidding registrations and of all the auctions conducted on Gavl more than half were sold to bidders using Gavl.”
The current technological climate: Will it comfortably nestle into the future of real estate?
Michael Yardney from Metropole Property Group says, “A large part of purchasing a home is the emotional feeling that you really can’t get through a virtual online tour.”
“Similarly, part of the benefits of selling your home by auction is the emotional tension created by being in the same room as your competition – watching their faces, seeing their emotions and hoping to outbid them.”
With private one-on-one inspections still permitted, Yardney says, “Currently, another significant shift in real estate transactions is that more properties are being sold off market, since the typical costly advertising campaigns are ineffective at present.”
Furthermore, as video-led inspections are unable to “show you the full perspective”, Yardney explains, “This is one of the reasons why more buyers are using buyers agents to represent them; to be there eyes and ears on the ground.”
Investors and overseas buyers have been known to purchase property without a physical inspection, president of REINSW, Leanne Pilkington, notes.
However, she says, “It is going to be very unlikely that you’re going to buy your family home without actually going there.”
Pilkington recommends buyers to do a virtual inspection of the property first, and if they would like to pursue it, then a private inspection would be the next step forward.
There are some estate agents who have been utilising online auctions previously for some time, while those who had always preferred the traditional mode have now needed to employ it because of the current circumstances, Pilkington explains.
Brendan Kelly from Results Mentoring says that there will always be generations that will be more comfortable with traditional modes or “hold onto ‘how things were’ or ‘how things have always been done’.”
“However, as technology continues to improve, become more intuitive, cheaper and easier to assimilate into daily life…tomorrow’s older generation will be fighting today’s technology to be sustained,” he says.
When asked how estate agents will progress with the new technologies that are currently garnering heightened interaction, Leanne Pilkington from REINSW says: “I think that [it] would mean that a lot of [agents] would be comfortable to do [online auctions] moving forward, but I still think that there are a lot of agents that prefer the ambience created from a live auction.”
She adds that over the coming weeks it’s expected that auction numbers will continue to reduce as private sales increase.
There’s still a lot of opportunity out there for the industry as it navigates the uncertain climate of today, but it requires certain measures to be enacted so that the market continues to cycle as households come under financial pressure.
“We really think that the state governments around the country need to have a look at stamp duty and provide an incentive by drastically reducing stamp duty to encourage people to transact over the next few months,” Pilkington says.
New overseas technology to help sustain local market
While private sales and inspections are still eligible to move forward under the government’s halt to public auctions and open houses, vendors continue to be disposed to innovative technology that allows them to move with the times.
Online platform Offr first launched in Ireland six months ago with plans in the pipeline to be made available to the Australian and New Zealand markets. However, its scheduled debut has fast-tracked by up to 12 months as a result of the local market’s changing needs.
Estate agents can integrate the platform with their websites in as little as 10 minutes, allowing sellers and buyers to engage in a myriad of sales methods that range from auctions, private treaties and sealed bidding.
CEO and founder of Offr, Robert Hoban, says that the platform’s success in Ireland “shows that everything is possible in our ‘new normal’.”
“We seem to be the only technology that allows real estate agents and auctioneers to conduct the entire sale process from their own websites which is a big plus in a world where everything is changing at a rapid pace,” Hoban says.
CEO of Ezifin, Tim Brown, who is assisting to bridge Offr across to the Australia market says, “Offr’s platform is years ahead of their competition, demonstrating how real estate will be transacted now and into the future.”
“The world as we knew it prior to Covid 19 will be very different to the way real estate will be transacted post Covid 19,” he adds.
The rules and regulations around COVID-19 and its impact on social distancing and socialising restrictions are constantly changing as this is a dynamic and evolving situation. As of April 27, SA and WA have announced that they will relax rules and allow up to 10 people through each open home. Visit our news section for the absolute latest updates and breaking news regarding Coronavirus and the property industry.