How to make your property move during lockdown

In the uncertain economic environment caused by COVID-19, you may be avoiding any big financial moves like buying a house or looking for a new rental. The inability to personally inspect properties or attend auctions in most circumstances is also slowing down real estate action, even as the industry finds innovative ways to continue operating.

But new insights have shown interesting property trends emerging in the era of coronavirus – and some money-saving opportunities you can seize while the time (and interest rate) is right.

So, what’s happening right now in real estate?

Executive manager of economic research at REA Group, Cameron Kusher says property transactions and rental searches have dropped off recently, but is now seeing more activity in other areas like ‘for sale’ searches.

“Australians are still watching the residential property market in particular and doing their research, thinking about their next move once this is all over,” Kusher says.

According to an April CoreLogic report, there are also fewer new properties being listed for sale. In the four weeks prior to Easter Sunday, CoreLogic noted 24,051 new residential listings advertised for sale across Australia, which is 27% lower than the same period in 2019.

Conversely, has seen a recent spike in new rental listings, which Kusher partially attributes to Airbnb being unable to function during lockdown, leaving landlords looking for longer-term leasing options.

Housing and rental pricing

Kusher predicts the increase in supply of rental properties – based on issues with Airbnb and a massive reduction in international students seeking accommodation – may lead to a short-term decrease in rental prices. He doesn’t anticipate significant property price falls.

“We might see some moderate price falls, but what’s more likely is that properties just won’t transact in the next little while, due to the fact that we’re sitting here in, as the government says, this ‘hibernation phase’ for the economy,” Kusher says.

CoreLogic’s report also notes some interesting recent trends in property valuation, where a property’s market value is defined and often sought by a mortgage lender. Overall, valuation orders slumped by 24% in the week ending April 12 and 19% over the last year. 

Meanwhile, CoreLogic hasn’t recorded an increase in mortgagee in possession (MIP) valuation events, where a borrower has failed to meet loan repayments and a lender repossesses the property. This could indicate that government stimulus and bank relief during the crisis is having the intended effect. 

The report also showed that home loan refinancing contributed to 75% of valuation orders by mid-April, suggesting borrowers are looking to tap in on record-low interest rates

What might a post-coronavirus property market look like?

Kusher suggests there’s “good opportunity for a strong recovery”, with low interest rates, cheap finance and pent-up demand likely to increase house sales beyond the current conditions caused by COVID-19. 

“When we do start to come out of this, the cost of borrowing is going to be very low, and it’s going to encourage an increasing number of people to go and upgrade their home, move to a new property or build their dream home. It could also encourage people who are renting to get into property as well,” Kusher says.

Keep in mind, many banks and lenders are now enforcing temporary lending restrictions for potential buyers from certain industries like tourism, hospitality and entertainment which have been hit hard by the pandemic. 

A loss of momentum in house value growth since mid-March has also been recorded by CoreLogic. In mid April, the week-on-week value assessment of combined capital cities dipped into negative territory for the first time since early August, 2019. Kusher warns that, if housing development doesn’t pick up quickly after the COVID-19 lockdowns, supply might not be able to meet demand and prices could climb back up.

Kusher also presents another interesting potential future scenario: if Australia’s borders remain closed beyond the lockdowns in an effort to stem COVID-19 resurgence after it’s contained, this could decrease housing demand from international buyers. It could potentially lead to rental prices dropping in the short term and then surging back up when buyer demand increases. 

How to take advantage of market changes over the long term

  • Refinance your mortgage

As new lending rules are imposed by banks during the crisis, it may be difficult to secure refinancing if you’ve lost your job or work in negatively affected industries (read our full article on refinancing during COVID-19 for all the details). 

If you are in a position where lenders will take you on, the current home loan rates are ripe for the picking and lenders are always on the look-out for refinance home loan customers. Find out how much you could save by refinancing.

  • Get into the property market 

Similarly, the drop in home loan interest rates (largely fixed interest rates) means this might be an ideal time to invest in your first pad - if you’ve got the right deposit stashed away. While things have become more complicated – live auctions and inspections have been banned, and some banks have adjusted their lending criteria as in the case of refinancing – there are ways that first-time home buyers can get ahead, like the extended loan approval period under the First Home Loan Deposit Scheme.

  • Choose financial support that won’t cost you down the line 

For individuals who are facing financial difficulties because of job loss or reduced income, this might mean applying for government assistance instead of taking out a loan or credit card to make ends meet. For business owners, this is about assessing government and bank relief eligibility. There’s the JobKeeper scheme, which aims to keep businesses afloat and Australians employed via a wage subsidy; partial and full rent payment waivers or deferrals for struggling businesses; and, various fee waivers and loan restructuring or holidays being offered to businesses by banks.

Find more information about coronavirus and your finances with our guide, and navigate bank accounts with Mozo’s comparison tool.