While it has impacted our lives dramatically, one silver lining of the coronavirus pandemic is the opportunity it is now offering owner-occupiers, particularly first homebuyers.
RiskWise Property Research CEO Doron Peleg said COVID-19 had helped strengthen ‘work from home’ opportunities meaning owner-occupiers could take advantage of ‘lifestyle’ prospects instead of being tied to employment hubs.
“While there’s nothing new about mobile professionals, the onset of COVID-19 changed the way we work as a nation with vastly increasing numbers working from home - and it’s here to stay,” Mr Peleg said.
“Those who work in a stable corporate environment, but do so remotely, are now taking advantage of great buying opportunities in NSW, Victoria and southeast Queensland.
“Before COVID-19 hit, there was already a strong trend of sea- and tree-change homebuyers looking for the best of all worlds – lifestyle, accessibility to employment hubs and affordable housing.
“These include areas of southeast Queensland such as the Sunshine Coast and the Gold Coast, just over the NSW border in Byron Bay and further south on the Central Coast, in areas such as North Avoca, Terrigal and Wamberal. Then there’s also sought-after locations such as the Hunter Valley, Wollongong and the South Coast, and in Victoria, the Mornington Peninsula, Geelong and Ballarat.”
Working remotely an accelerating phenomenon
In 2016 the Australian Bureau of Statistics reported almost a third (3.5 million) of all employed Australians regularly worked from home. Since the onset of COVID-19, this number has skyrocketed. In March a Gartner survey showed 88 per cent of Australian organisations have adopted working from home as part of their coronavirus response many to cut costs during the pandemic by focusing on “effective use of technology (cited by 70 per cent of respondents) and freezing new hiring”.
“While many organisations were using remote working to improve productivity and the attractiveness of workplaces to entice the best talent, reduce office costs and reduce international and intrastate travel prior to the onset of COVID-19, it has now become an accelerated phenomenon with offices across large cities trying to minimise face-to-face meetings that required commuting.
“Interestingly, since COVID-19 and the increase in remote working there has actually been an improvement in productivity.” The Gartner survey states 49 per cent of respondents said they had been more productive during the time they would normally spend commuting to work, 36 per cent were less stressed and 32 per cent were better able to concentrate as they were not distracted by colleagues.
Office vacancy rates are a clear sign of how the pandemic has affected employment. According to the latest Property Council of Australia's Office Market Report, Sydney’s has almost doubled from 3.9 per cent to 5.6 per cent for the six months to the end of July while in the Melbourne CBD it rose from 3.2 per cent to 5.9 per cent.
There are also a number of additional incentives that put home buyers and especially first home buyers in an enviable position. These include federal government programs such as the First Home Buyers Deposit Schemejust a 5 per cent deposit can be used to enter the property market and the avoidance of Lenders Mortgage Insurance (LMI), as well as stamp duty exemptions.
“What this all means is now is the time to buy if you are a first home buyer or an owner-occupier as this current slowdown in the property market is only temporary, with houses in popular areas likely to experience solid capital growth in the medium to long term.
“Once the COVID-19 issue is resolved, most likely in 2021, the traditional connection between low interest rates and increase in dwelling prices is likely to take place.”
He stressed, however, that investors buying rental apartments unsuitable for families were taking an enormous gamble, with both equity and cash flow risk expected to materially increase. Serviceability is also a major factor for investors who rely on a stable rental income to cover the costs associated with property and particularly the mortgage.
Co-founder of BuyersBuyers.com.au Pete Wargent said navigating the current market conditions was challenging but understanding the nuances of the local market and negotiating accordingly on price and terms was the key.
“If you negotiate well, you can secure a very good property and manage the risk of lower prices in the short term by simply paying less,” he said.
Rich Harvey, Buyers Agent and CEO of propertybuyer.com.au said the pre-spring and spring market would provide a range of opportunities for buyers to consider getting a better foothold in the market as listing volumes started to rise.
“With the onset of COVID-19, areas such as the Sutherland Shire, Inner West and Inner South West, that were showing good promise have paused their strong growth trajectory and now represent good value for buyers,” he said.
“The traditionally strong markets of Eastern suburbs, Northern Beaches and North Shore are also giving buyers the chance to get in for lower prices than last year.”
RiskWise Property Research was formed in 2016 with the goal of providing property risk advise and research services to help its clients make informed purchasing decisions.
Its goal is to provide private investors, home buyers, property professionals and institutional clients with detailed risk information to support smarter decision making. Its vision is to be a global leader in property risk rating and research helping its clients to achieve deeper risk insights so they can make smarter property investment decisions.