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Property buyer demand strong during COVID-19

Buyers have remained enthusiastic in the property market during COVID-19, but property listings have reduced drastically.

The housing market has proven to be “extremely resilient” during the coronavirus pandemic and has performed strongly over the last couple of months, according to Loan Market/Ray White Group.

Speaking at a webinar hosted by Loan Market and Ray White for investors and landlords this week, Ray White managing director Dan White said the housing market entered the pandemic phase in a strong position and buyer numbers have continued to remain robust.

“The average registered bid per auction is now five per auction, which we haven’t seen since we have been collecting registered bidder numbers now for the last few years. We haven’t seen numbers that high,” Dan White said.

“We never had more buyers per property.”

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The demand side of the property market has remained strong as buyers look at interest rates and the long-term future of the economy, he added.

“We’re getting good prices. Vendors are happy with the prices they’re receiving coming to market,” Dan White said.

“We’re seeing that we’re able to achieve 2019 prices for our vendors at the moment.”

However, on the other side of the equation, the supply side is lower and this has been consistent across Australia, according to Dan White.

“Listing numbers are a lot less than what they were before, probably down about half across the board. I’m speaking generally across the market,” he outlined.

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Similar comments were made by REA Group chief economist Nerida Conisbee recently as she told The Adviser’s In Focus video series that there has been a mismatch between buyer demand and properties for sale. While buyer demand remains high for property, there has been a drop-off in properties for sale.

Commenting on whether property investors should hold or sell, Dan White emphasised that this depends on the investor’s individual circumstances, as well as their short-term and long-term objectives. However, he added that risks are always inherent in the property market.

“If you’re worried about those, there is a strong market today. And that is, [being] able to transact in a market with a lot of stock not competing with your own home or investment property,” he said.

A post-COVID-19 world

Loan Market executive chairman Sam White told the webinar that there are many unknowns and uncertainties in store for investors once the coronavirus pandemic subsides.

This would especially be the case as government stimulus measures introduced to cushion the blow of the economic impacts of the pandemic could cease to exist or would be adjusted, and bank loan repayment deferral measures could come to an end.

“It’s clear that supply and demand will control pricing as it always does. It’s clear also that there will be more risk in the market because you are making assumptions as to what happens in four months,” he said.

As uncertainty remains around what the economy and unemployment figures would look like in the coming months, Sam White said there are currently no answers around what investors should do.

While some investors will be more tolerant of high risk and will be able to make decisions consistent with that, others would be more risk-averse in the current environment.

“To get ready for that, the first thing is, make sure that you’re getting the cost of your funding as sharp as you can, and as best as you can,” he said.

“That might be fixed, it might be variable, depending on your individual needs and circumstances.

“And look at how you can position yourself. Do you have a buffer in place? Is there any capital to draw down?”

Others still might consider taking advantage of a liquid marketplace and strong pricing, Sam White concluded.

[Related: Housing market faces prolonged downturn: ANZ]

Property buyer demand strong during COVID-19
Property buyer demand
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Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

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