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Buyers hunting for more space on track to be major force in spring

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Has Melbourne’s COVID-19 lockdown made you weigh up the advantages of upgrading to a new property? You aren’t alone.

Some Victorians are now using the coronavirus-inspired restrictions to prepare their property for an early sale in the 2020 spring real estate market.

Others have zeroed-in on perceived flaws in their current home – too little space outside for the kids, perhaps, or the absence of a home-office. They, too, are ready to make a move.

But this year’s spring market could surprise. Buy and sell transactions are on track to move at high speed, potentially leaving would-be buyers who haven’t got their finance prepared or properly identified their needs to real estate agents, empty-handed.

And judging from the post-lockdown performance of comparable housing markets to Melbourne, such as Auckland, New Zealand, the competition for well-located and roomy properties is set to be intense.

Nelson Alexander Sales Director Arch Staver says space will be the most coveted feature that homebuyers will search for this spring. 

“One of the major outcomes of lockdown is that homeowners are realising some of the inadequacies of their current living arrangements,” he says.

“The longer you spend in a house and stare at something, the more flaws you can pick up and recognise where it is not quite efficient.

“And, of course, interest rates are going to remain very low.

“The Reserve Bank Governor Philip Lowe has already declared that the next three to five years are likely to see the same very low-interest rates. In this environment, upsizing and upgrading are very much at the forefront of people's’ thinking.”

Extra backyard space, allowing homebound kids to more readily step outdoors, is one area of demand being seen by Nelson Alexander agents. Additional bedrooms and separate dining-rooms, where many children have been undertaking homeschooling away from living areas, are also highly sought-after.

“There is a throwback to home features we thought had diminished,” Mr Staver notes.

“Melbourne was becoming similar to other big metropolitan cities across the world in which people use their home to sleep and eat in but spend most of their time out enjoying the vibrancy of their city.”

“That vibrant, big-metropolis city-life may certainly all come back again. But more and more people are starting to think that maybe we will have to live with COVID for longer than we anticipated, so features like a larger backyard are on buyers’ wish lists.”

Mr Staver says Nelson Alexander agents are constantly talking to prospective vendors.

The company is very hopeful of having a robust level of supply in late-September and early-October. Nelson Alexander has listed numerous auctions for that period.

“We are getting our guide, if you like, from the Auckland property market,” Mr Staver says.

“The Auckland market is very similar to Melbourne’s market: Auckland’s primary method of sale is auctions and its median price is very similar to Melbourne’s.”

“Although Auckland is currently going through a smaller lockdown, in the immediate post-lockdown period, after March, there were three consecutive months of buoyant activity.”

“Auckland saw supply increase and prices increase as well. So we are very hopeful that a similar market will be seen in Melbourne as we come out of lockdown.”

Under Stage 4 restrictions, inspections and auctions of homes can only be done online. No one is allowed to see the house in person, but once these restrictions are rolled back, inspection activity is expected to significantly increase.

Sales are still happening during Stage 4. Agents say people who live interstate and overseas are inquiring about properties along with those who live closer by to upcoming listings.

Commonwealth Bank Chief Executive Matt Comyn says the property market has so far been more resilient than the bank expected a few months ago, with prices drifting only slightly lower.

“We do have an expectation that in some areas, particularly in inner-city areas, there has been downward pressure on rental yields, so we think that that’s going to weigh on house prices,” Mr Comyn told journalists in August.

Even so, Mr Comyn said property had so far proven to be more resilient than the bank had expected initially, with prices in Sydney and Melbourne still higher than a year earlier, despite recent falls.

“We would say overall, and looking at the numbers in the last few months, the housing market has been more robust than perhaps we would have anticipated from March,” he said.

Buyers are looking for extra space at any new property, even if it is an apartment. Many also want a fully renovated home because they see time as becoming more precious.

Mr Staver says people looking to upgrade need to get on the front foot and contact their agent.

“They should establish a rapport with the agent around what their criteria and motivation is because when the market reopens, sales are going to be happening quickly,” he says.

“We are also encouraging our clients to speak to all of their lenders and to make sure they have the best loan-rate available. It is the perfect time to do that because the banks are looking for market share and they have relaxed the cumbersome requirements for shifting from one lender to another. That makes the financial consumer the lead player in negotiating new finance. 

“Real estate transactions are now occurring in real-time. It would not surprise me if sales occur in warp-time when we come out of lockdown.”

“Transactions are going to happen very, very quickly, so the best thing any buyer – and a buyer who is going to be a vendor as well – can do is to be proactive. If they haven’t heard from their agent, they should be talking to another agent.”

If you would like to discuss your property needs in more detail, please contact any Nelson Alexander office.

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