How Coronavirus Has Affected The Queensland Property Market

"It's important to see the facts and numbers behind a resilient Queensland property market." - Mark McEvoy, Senior Investment Analyst

OWNER-occupiers and first-home buyers are keeping the Queensland property market alive as investors disappear in the wake of the coronavirus pandemic.

Although those hoping for a bargain may be disappointed after a shortage of new property listings has kept house prices from dropping, and government stimulus packages for the rental market have stemmed a flood of distressed sales to the market.

Online listing sites recorded a 12 per cent increase in first-homebuyer activity in March compared with the same time last year, despite the shutdown of onsite auctions, public open home inspections and a 31 per cent drop in new home listings over the past two months.

And as Queenslanders take their first small step out of coronavirus hibernation today, property experts say a strong property market at the start of the year and the industry’s swift move to a 100 per cent online sales model, have been key factors in maintaining property values and sales activity throughout the coronavirus crisis and will continue to do so post-COVID-19.

Brisbane house values rose 0.3 per cent in April to a median house price of $507,982 following a 0.6 per cent rise in March, CoreLogic’s Hedonic Home Value Index released yesterday.

While preliminary figures from property website realestate.com.au was showing higher growth on the Gold and Sunshine coasts.

Realestate.com.au chief economist Nerida Conisbee said: “It’s not roaring ahead but it’s not bad considering what happened.

“First-home buyers are the biggest players in the Queensland housing market at the moment, while investors are the buyer group that has dropped off the most.”

Coronavirus hit Queensland at a time when the Brisbane property market was recording its strongest start to the year in five years.

Auction volumes were up more than 50 per cent on the same time last year and two thirds of those houses were selling under the hammer, according to data from CoreLogic, a data analyst. In the inner city of Brisbane, prestige property continues to change hands, with estate agency Ray White New Farm recording almost $90 million in sales during the first two months of the year. This included Cintra House at Bowen Hills, which sold for a lucrative $7.5 million.

By February the year looked like recovering much of the ground it had lost after the Banking Royal Commission enforced stricter lending rules leading to fewer mortgage approvals.

The investor market, while not at its previous high of 40 per cent of market share, was climbing through 28 per cent, and auctions, which historically made up only 5 per cent of the Queensland market, were gaining popularity.

Within two weeks in March, Australian society all but shut down when COVID-19 was declared a pandemic and strict measures were introduced to stop it spreading in Australia.

Onsite auctions and public open homes were suspended with just over 24 hours’ notice, and the industry scrambled to adopt a 100 per cent online model of business, with virtual open homes, live streamed auction events and agents working from home.

In the weeks since, the number of auctions has dropped by more than 50 per cent, although clearance rates have been higher than before the shutdown.

“It’s a bold way of selling in this environment but the clearance is actually higher now than it was when we were holding on site auctions,” a Ray White spokeswoman said.

“There’s a lot less stock but there’s still a lot of buyers.”

Tim Lawless, Asia Pacific head of research at CoreLogic, said it was Brisbane’s low auction volume, compared with Sydney and Melbourne, where auctions represent around 25 per cent of sales activity, that has largely protected it from the impact of a national auction downturn.

“With such a low proportion of properties taken to auction there has been less disruption as vendors and agents ensure their auctions proceed,” Mr Lawless said.

CoreLogic data also shows that new property listings are 25 per cent down on where they were a year ago.

Real Estate Institute of Queensland CEO Antonia Mercorella said:“Even before coronavirus we were seeing listings on the decline.”

Yet it is the lack of housing stock that industry experts believe has helped to stop Queensland house prices from plummeting during COVID-19.

“Consumer sentiment has crashed during April, which makes it extremely hard for households to make high commitment decisions such as buying or selling a home,” Mr Lawless said.

“Chances are we will see buyers and sellers moving onto the sidelines until sentiment starts to lift in line with improved economic conditions.

“The good news is that this won’t last forever. As the economy improves we should see selling conditions improve as buyers emerge while advertised stock levels are low.”

Lenient lending conditions for distressed borrowers and record-low interest rates are also expected to shore-up house values by stemming the flow of distressed property sales.

Strong interstate migration to Queensland will also help cushion the property market from the drop in overseas migration if international border closures remain the last restrictions to be lifted.

In the rental market, a downturn in tourism is pushing fully-furnished Airbnb properties on to the long-term rental market with the Ray White Group recording a 10 per cent increase in rental properties in some areas. The move could put downward pressure on rental rates and comes as the Palaszczuk Government passed residential emergency laws in state parliament last week to protect renters from eviction if they were unable to pay rent due to a loss of income during the pandemic.

“The virus curve has been flattening at a faster rate than anyone expected, prompting calls for an earlier lifting of some social policy measures,” Mr Lawless said.

“As policies are relaxed, potentially sooner than anticipated, we should see economic conditions improve, however its likely there will be some hangover in higher unemployment, ongoing international travel restrictions and a legacy of social distancing that could impact on housing activity.”

Ms Mercorella said the Queensland spirit would play a big part in the COVID-19 recovery.

“The Queensland property market has proven itself to be resilient time and gain,” Ms Mercorella said. “It’s the number one natural disaster state in Australia. We are an extraordinary group of people, a no-nonsense community and we get through things.”

“I don’t want to live with a constant fear of what happens next”

Ana Garcia and her husband Geoff Allen were living in the US for two years before deciding to return to Australia to buy a family home and settle down in the middle of the coronavius pandemic.

The couple bought a house at auction in Albion in Brisbane’s north in March and are now working from home, paying off their mortgage.

The couple are also seeking to put the apartment they own in Clayfield, and lived in before going to the US, on the rental market; a daunting prospect at a time when thousands of Queenslanders have lost their jobs and many are struggling to pay their rent.

Yet the couple are undeterred by the situation and are happy to rent it at a reduced rate.

“Our rental agency is doing more background checks and being more careful about who they are going to rent the unit out to because obviously we are all in a difficult situation. We have bought a house now, so if the tenant is in trouble, we are in trouble,” Ms Garcia said.

Emergency laws were passed in state parliament last week to protect tenants struggling to pay rent, and tenants and landlords are required to negotiate new rental rates if tenants are in financial hardship.

Ms Garcia, who is a wellness coach, said all the uncertainty is put into context when she contacts her parents, who are doctors in Spain, for a daily update.

“When I talk to my parents and they tell me what is going on in the hospitals there, you know what, if my apartment is rented for $410 or $430, what does that really matter?” Ms Garcia said.

“If we have to get rid of the (rental) apartment, it is just money, it is not a life.”

A family member looked after the two-bedroom apartment at 7/4 Bonney Ave, Clayfield for the couple before they listed it for rent through Ray White Clayfield last week.

“This has given me a different perspective. At the end of the day the economy has always fluctuated and will continue to do so.

“I don’t want to live with a constant fear of what happens next. We will make decisions as they are needed … we are okay, we are very well.”

Source: https://www.realestate.com.au/news/how-coronavirus-has-affected-the-queensland-property-market/

Bela, D. (2020, May 2). How coronavirus has affected the Queensland property market. Retrieved from https://www.realestate.com.au/news/how-coronavirus-has-affected-the-queensland-property-market/