In these (cliché alert) unpredictable and unprecedented times (we did warn you) many of you might expect us to report that real estate is flat lining right now. We are happy to report that it is anything but. In fact, we are presently riding a little wave, although it is proving a bit of a bumpy ride. Some are winning big and some are winning small; but everyone is winning. 

So what’s fuelling this wave of real estate activity on the north coast? There are a bunch of factors at play.

Probably the biggest contributor to the equation is the shift in work practices necessitated by COVID-19. Oodles of people found themselves working from home as the pandemic struck, and from this exercise they learned two simple things: ONE – working from home  was entirely possible to do once you had the right technology in place, and in fact – they quite liked it (no long commute to and from work etc); and TWO – they realised that they could probably do this from anywhere, so let’s relocate to somewhere nice and we’ll all live happily ever after.

A third element contributing to a favourable property market is the realisation amongst some that if the pandemic is going to keep swirling around causing multiple switches in and out of shut-down, then they might as well be living it in space and comfort, amongst beautiful surroundings.

Some in real estate are calling these factors the coastal shift. Whatever you want to call it, it’s driving a tectonic shift in buyer habits. There are buyers who are fleeing COVID affected areas; some are departing from city living; and other buyers are locals who are changing the way they work. There is general dissatisfaction about the decision making of people in authority, and buyers are taking charge of their destiny.

Our region is seen as a safe bet. At the time of publication, we’re fortunate that our COVID numbers are low; we have NBN broadband installed throughout a lot of the region; we’re close to busy airports for when travel restrictions lift; we have good infrastructure; the region is blessed with natural beauty, and our community is welcoming. Who wouldn’t want to live here?

Throw in the historically low interest rates which help to minimise risk and you have a mini real estate boom. We are yet to see if this will become a new trend or a short-lived blimp. Significant economic fallout is yet to be really felt here; perhaps the pain is still coming? Or are we on the cusp of a market mega-boom, with the smart people securing things now before prices get away from them? Only time will tell.

All types of property are currently in demand. The most sought-after properties remain the ones with nothing left to do, but buyers are prepared to renovate or to build – and everything is up for grabs at the right price. Some places are selling within a week. At the high end of the market, the buying pool has real depth, and we are seeing scenarios where a number of serious buyers are tousling for individual properties.

Buyers are contacting us to let us know they are looking and they want to be at the front of the line as new properties come onto the market. And many of these buyers have healthy budgets. Buyers are well represented across the board, and include baby boomers, families, individuals and newly marrieds. Some people are buying for immediate occupancy, and others are buying now with plans to move here in five years. Bigger blocks are sought after because they provide better opportunities for space and coping if and when lock down returns. 

The current scenario certainly feels like an early Spring market. But it’s more than this. High property demand is colliding with a short supply and this is having a curious effect on prices. Prices are jumping and this makes it difficult to accurately predict. Certainly, competition is seeing some great results, and the market is moving quickly. 

There’s another factor also weaving its way back into the current real estate tapestry, and that’s FOMO. Rather than sit on the fence, people are jumping into the action to ensure they don’t miss out. And this starts to drive momentum as others also heed the call and jump in – with the mantra ‘we should be moving because the market is booming’ ringing loudly. And so the ripple effect potentially becomes a wave.

Border closures mean that immigration has stopped, and this has a flow through effect to the market. There’s credible speculation that Sydney will experience a downturn, especially as people move out with no-one moving in to replace them. Perhaps Sydney’s pain will be our gain? Emotion and FOMO are twin driving forces and they’re delivering a rising yet unpredictable market.

The final piece of the puzzle that seems to be driving prices is the Hollywood factor, with some big names living here permanently and many visiting for long periods. There are also a number of productions currently being filmed here, and these aspects really cement our region as a destination of choice for people keen to relocate.

Probably the only brake on real estate right now is the tightening of lending criteria from the banks. It can take up to four weeks for a home loan to be approved, with banks also considering job security in the context of the current environment as they assess loan applications. With some traditionally strong industries struggling during the pandemic, and banks being harder on business owners and the self-employed, this is removing a few people from the buyers pool. To be strongly positioned when the right property presents, buyers need to have their banking pre-approvals in order.

Read more in my Spring newsletter . . . .

There has been much talk about these ‘unprecedented’ times. As a word, it is getting an unprecedented amount of coverage. So, we will just refer to the period of Autumn 2020 as ‘unusual’.

In April and May, life in the world of real estate (and everywhere else) was unusual. But you will be pleased to know that things are now settling down.

So, what did unusual look like? Well throughout the whole lockdown period we continued to receive enquiries for property. And we also continued to achieve sales throughout this period as well. Admittedly, these sales were for properties that were already on the market rather than new listings, but it is important to state that while Australia went into isolation, the property market did not. Typically, we were dealing with people that were serious about buying or selling, with speculators light on the ground during this time.

There was a four-week window where we couldn’t offer open houses. Once that concluded, we were pleasantly surprised at the numbers of people coming through. In fact, numbers were what we would normally see, outside of COVID-19.

We have all read the stories about a predicted downturn in the property market. Some have predicted as high as a 30 per cent drop. Others are leaning towards a more modest reduction. We do expect that there will be an adjustment, but it will be nothing like the worst-case scenarios being painted by more sensationalist media commentators.

And without the benefit of a crystal ball, can anyone really know? There are many post-isolation factors still to be played out. The market is directly affected by job security, so the timing of the conclusion of the job keeper allowance will likely have an impact. Our Treasurer has signaled that Australia is now in a recession, but the extent of the recession will not be apparent until data from the June quarter comes to light. And meanwhile, it appears that other world economies are in significantly worse shape – so maybe we are the lucky country after all?

But we need to be realistic about prices and acknowledge that a downturn is likely. Premium house prices can only be achieved in a market with strong demand and short supply. And today’s north coast property market is characterised by weakening demand and a moderate growth in supply. Which is a complete flip on what we experienced just a few short months ago at the beginning of 2020.

The key take home messages are that yes, things are moving more slowly than before, but if a property is priced correctly, it will sell. And if you are sitting on the sidelines waiting for a bargain, you might be waiting a while.

Demand for property remains relatively strong considering the overall environment, but it now comes with some strings attached, with purchasers keeping one eye on the horizon to see if any of the doomsday predictions are coming through. Meanwhile, supply has weakened with many potential sellers currently sitting on the fence and waiting to see which way the market will move. Right now, if you don’t have to sell then there is no incentive to sell. However, it’s inevitable that the market will adjust, and supply will catch up as time goes on. Time does not wait! There are always people who need to buy and sell regardless of outside factors: people need to sell as their work location changes; retirees downsize; families upsize as their numbers grow; and there’s no shortage of young couples moving into the market.

People move to our region for a reason. It is rarely for a local job. Often, they are downsizers or sea changers looking primarily for lifestyle. We also predict a second wave of big city migration to our region, as city dwellers who have been working from home make the connection that a work from home arrangement is a viable way to earn a crust, and that relocating to a cheaper ‘lifestyle’ region with access to broadband, good schools and airports might just make for a better life. In tandem with this, people may also make the connection that living in low density housing means more personal space and better access to the great outdoors should we experience a pandemic second wave.

Within our region, demand remains steady for properties in Lennox Village and East Ballina, followed by Ballina Island. We are still seeing sales above $1M, with demand for both high and low ends of the market relatively equal. The median price in Lennox is now over $1M. Houses are more in demand than units. Properties in the $500,000 – $800,000 price bracket are selling relatively well, as are properties in $1M – $1.2M bracket.

If you are thinking of selling but have been sitting on the fence; now may be a better time than later to jump in as you will be ahead of the inevitable catch up period. 

Read more in my Winter newsletter . . . .

Aside from the usual holiday speculators, the festive season is not traditionally a busy time in real estate; but this year has proven to be an exception. There was genuine high interest and activity throughout December and January, with many properties sold.

During February, this equation changed. While the high numbers of buyers remained, the supply of properties to buy reduced. In fact, what we saw was a growth in the number of people entering the buyers pool, with a corresponding decrease of supply.

What’s driving this growth in demand for properties?

There are a few reasons. Firstly, historically low interest rates are providing a unique opportunity for more people than ever to gain a toehold into the property market. In tandem with this, there is a steady migration into the property investment market as a consequence of the low interest rates. Growth in buyer interest is also being spurred on by the banks becoming marginally more flexible in their lending criteria as the dust settles post banking royal commission, meaning that the process of securing a loan has become a little easier.

Similarly, the decline in supply can be attributed to a couple of factors. One is that, generally speaking, people are not under financial duress and do not have to sell. Another telling factor is the subset of people who want to sell, but with limited current options to purchase, are choosing to wait out this current scenario until they have more choice. And this later thinking process creates a catch22 situation, where because there is less to buy, people don’t sell, and a cycle is created.

This type of market is characterised by quick sales, competitive offers and great prices. Essentially people are eagerly contesting the small pool, and this has the effect of pushing prices up.

In a hot market like this, sales might not just come from an agent’s data base. To achieve the best outcome for the vendor, agents need to be across all aspects of their sales arsenal including digital marketing to provide optimum exposure from multiple buyer pools.

What’s been really positive is that in the last few months, almost all properties destined for auction have either sold prior or on the day. Offers range from the target price to above target, and importantly – sellers are very satisfied with the results.

Another consequence of a reduced supply and high demand market is that buyers are less picky and will look at everything. This scarcity of stock means one thing: It really is a great time to sell! 

Read more in my Autumn newsletter . . .

Well, it’s a very curious market that we are finding ourselves in, with a bunch of outside influences helping to shape it. 

Overall, the last three months have been relatively quiet; but careful analysis shows that it was never going to be anything but a modest period. April was a super-maxi public holiday extravaganza, with many people combining the Easter and Anzac Day holidays to capitalise on a 10-day straight break. Throw into the mix two weeks of school holidays, and you have an impacted real estate situation.

Another key influence in the market, from late March onwards, was the federal election. During an election period people traditionally take a ‘wait and see’ approach when deciding to either buy or sell, and this effect was compounded during this election campaign, with issues such as proposed reform of property tax concessions, capital gains tax and negative gearing all major talking points. The end result is that people stepped back from property during this period. And this effect was further influenced by the earlier NSW State election, which also had people sitting on the fence.

There’s another curious factor at play here. People are often more conservative around tax time as they weigh up their financial position, and this can also flow into how they approach a sale or purchase, with many choosing to hold off until the new financial year before jumping into a new real estate venture.

Within the current market, we are still seeing lengthy delays in concluding sales. Some properties create an impression of appearing available for a long time, but in actual fact they’ve been in the process of being sold the whole time, just awaiting finance approval.

Lending criteria continues to be tight for borrowers and financial approvals can take several weeks. We encourage buyers not to be complacent about this, as it can result in missed opportunities on dream homes. It may have been a quick approval process for you last time, but everything has changed. Even refinancing can be slow and tedious. There’s significant paperwork to be completed and taking out a new loan with your current provider won’t necessarily lead to a shortcut.

You could take a dim view of the last three months, but in fact we’re excited as we feel confident that we are entering a catch-up phase now that the dust has settled on the election and people have regained focus after all that holidaying. And this sentiment is largely being echoed by real estate establishments around the nation as the recent sluggish market was universally experienced. Our prediction for the upcoming period is continuing stability and improved conditions. And we have plenty of compelling reasons to substantiate this claim.

The 25 basis points interest rate cut announced on 4 June was significant. Not only was this the first time that interest rates have dropped in nearly three years; at 1.25 per cent it’s the lowest rate ever seen. This is extremely positive for borrowers and should help to free up the market.

And we have more good news for borrowers. In addition to the June interest rate cut, there are proposed changes to borrowing criteria. Currently, the Australian Prudential Regulatory Authority (APRA) uses a mandatory seven per cent interest figure when assessing mortgage applications, with an understanding that if interest rates do later go up, the borrower still has the ability to meet their loan repayment obligations. This seven per cent ‘stress test’ looks likely to be superseded with a new rate which is 2.5 per cent above the bank loan. For example, if you are looking at a loan which is actually 3.5 per cent, then APRA will assess your ability to repay at 6 per cent. This change is expected to come into effect soon, and we anticipate it will have the dual effect of loosening up the market and making borrowing more affordable. What won’t change is the amount of paperwork or the long approval time frames, so continue to plan ahead and expect delays.

And there’s even more good news, this time from the tax office, with promised tax cuts for low to medium income earners looking likely to be adopted. People with taxable incomes between $48,000 and $90,000 can expect to experience a tax offset of up to $1,080. This is up from a former offset figure of $530, making conditions even more favourable for borrowers.

For sellers, action in the current market is strongly dictated by accuracy in pricing. Pricing must be spot on to gain interest, and the first weeks on the market remain the best window for attracting genuine buyers and achieving a satisfactory price.

Read more in my Winter 2019 newsletter . . .

Like a hot air balloon, markets need heat to rise. When the heat comes off, the balloon – and the market – starts to come down.

Where is the balloon on the north coast right now? It’s in a ‘normal’ position – and like the bowl of porridge for goldilocks – it’s no longer hot but it’s not cool either. Some would say that it is ‘just right’.

And while this current normal period took buyers and sellers a little by surprise a few months ago; the transition period from hot to normal is now over and people are more aware of where the market is at and what properties are worth. Our buyers are educated and have no appetite for overinflated prices; but get the price right and the sale will follow.

With summer now wrapped up, activity is starting to pick up. We have more sellers making enquiries than in the last six months, and things have settled into a new routine. People who were previously sitting on the fence are now feeling more comfortable about current market stability and are jumping into the fray.

The current market certainly favours the buyer. During open homes, we are seeing good attendance at well presented, desirable properties. And less desirable properties – not so much.

In its current state, the market provides agents like us with a golden opportunity to really help navigate sellers through the sales process. With properties taking a little longer to sell, great market knowledge and salesmanship is more important than ever.

If, like Humpty Dumpty, the sale looks like falling over, we are there to help put it all back together. We will work to keep the buyer interested and to achieve a sale that is pleasing to all parties. We can put the fires out that you may not see coming and draw on our considerable experience to help you through unforeseen circumstances. We provide advice with aspects such as a less than glowing building inspection with adverse building reports, finance obstacles and contract hiccups etc.  And as always, we are acting on your behalf helping your property achieve its full sale potential.

Anecdotally, builders are starting to report a slowdown in building enquiries. Given that it has been frenzied for quite a while, this is a thumbs up for people looking to build, as it means less waiting to get started.

TIME ON THE MARKET

We are seeing an average time on the market of three to four weeks from first listing until the offer of acceptance. However, this is when the real fun starts, and it could be another three weeks or more before contracts are exchanged. 

Why the wait? The holdup lies with the banks who have adopted more of a cautionary approach in the wake of the Banking Royal Commission.

The take home message for buyers is have your paperwork ready. Meet with the banks prior to searching for a home and obtain pre-approval at the least. Even in situations where a buyer is fully prepared and approved, we are still seeing lengthy wait times. 

Buyers need to be prepared to jump through some hoops. Even if you were pre-approved six months ago and your circumstances have not changed, expect to have to start the whole approval process again. And people are finding they can’t borrow as much as they could twelve months ago. 

Naturally, this practice is contributing to a slowdown in the market. It also creates a false impression of local real estate, with some homes appearing to be on the market for two months or more; when in fact the property has been in the process of being sold the whole time.

Read full Autumn newsletter update . . .