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Caution Urged as House Prices Start to Fall

Caution Urged as House Prices Start to Fall (1)

As the social distancing ban on home auctions and viewings starts to bite, the message to both buyers and sellers is not to panic.

But the latest auction market preview—handed down amid the federal government’s latest round of restrictions—paints a sobering picture of the outlook for residential property prices.

With 3,065 capital city properties scheduled to go under the hammer, Corelogic analysts originally predicted the week ending 29 March would be the busiest of the year for auctions.

Despite the real estate industry’s quick adaptation to social distancing measures, Corelogic now predicts a number of vendors will withdraw their property from the market completely, or postpone until circumstances improve.

“After the weekend, we should have a better idea on how this is going to impact the auction market going forward.”

And despite strong momentum in the housing market in recent months—the latest results consistent with house price growth of around 5 per cent year-on-year, according to macroeconomic research group Capital Economics—further restrictions on “non-essential services” could include a ban on buying and selling real estate, which would further impact home sales.

And even when the Covid-19 outbreak is over, the outlook is still far from clear, according to Capital Economics senior economist Marcel Thiellant.

“Even once restrictions to prevent the spread of coronavirus come to an end, we suspect that rising unemployment and tightening bank lending conditions will result in weak housing demand and falling house prices.”

Thiellant suggests that looking at how Australian residential property has fared against negative economic shocks in the past helps shed some light on the impact of the current slowdown on property.

“House prices were broadly flat in nominal terms during the recessions of the early-1980s and early-1990s, though they fell in real terms.”

“And while they kept rising throughout the shallow economic downturn triggered by the bursting of the dotcom bubble, they fell at least initially during the global financial crisis and during the period when Australia’s mining boom turned to bust.

“Given that inflation is now much lower than it was during the 1980s and early 90s, we think that those latter episodes will provide a better guide for what is to come,” Thiellant said.

Unemployment rates are also a key indicator of Australia’s prospects for recovery from the “coronavirus recession” for AMP Capital chief economist Shane Oliver.

“A relatively short recession that sees unemployment rise to around 7.5 per cent would likely only set prices back around 5 per cent or so, after which prices would bounce back,” Oliver said.

“But a deeper recession with, say, 10 per cent unemployment, risks tripping up the underlying vulnerability of the housing market around high prices and high debt levels. This could see a 20 per cent fall in prices.”

Oliver said the latter scenario highlights the need for the government and the RBA to minimise the fallout from coronavirus shutdowns in terms of businesses and jobs.

Property analyst Terry Ryder said that Australia’s property market has outridden major economic downturns before and will again, and the anticipated “short, sharp downturn” could pay off for those prepared to act when others are pausing for thought.

Speaking at this week’s “coronavirus – threat or opportunity” webinar, Ryder said that fear about future economic certainty was understandable, but both investors and owners needed to remember property was a long-term game.

“It is a time to be looking for opportunities, when others are perhaps intimated and sitting on the fence,” Ryder said, adding that government financial stimulus and flexibility from banks during the coronavirus shutdown would help cushion the property market from any significant blows.

Ryder predicts that while any reduction in market activity as a result of changes to the way Australians interact in the market would not necessarily result in a significant reduction in prices.

“One of things that is happening is vendors are already not listing their properties for sale at the same levels they were a year ago and two years ago – and I think that is going to be exacerbated by the virus crisis,” Ryder said.

“We are still going to have demand, but have relatively few properties for sale and that will help to put a floor under property values.”

Caution Urged as House Prices Start to Fall (2)

Buyers’ agent Veronica Morgan said that lessons could be learned from the global financial crisis, when “otherwise sane” people succumbed to catastrophic thinking and knee jerk sales prevented them from re-entering key markets.

“At my agency we never recommend buying property with a short-term focus—nor do we recommend knee-jerk selling,” Morgan said, adding that even if there is a market downturn, history is on our side.

“When fear takes hold, unfortunately otherwise sane people fall for catastrophic thinking declaring, ‘that’s it, now the market’s now going to plummet 40 per cent’. Property bears have been trotting this figure out whenever there’s been a bad sign for the last couple of decades,” Morgan said.

“But things never actually pan out in that way—people still need homes. Life as we know it may change a bit, but it will nevertheless go on.”

Likewise, buyers’ agent Rich Harvey said investors needed to be prepared to buy before the market bounded back – and those who were struggling should talk to their bank about getting a better rate to refinance or taking a mortgage payment holiday.

“Don’t panic – it is not the time to sell the family home. Stay the course and talk to your bank about holding on,” Harvey said.

“We will get through the crisis.”

 

 

 

This article is republished from theurbandeveloper.com under a Creative Commons license. Read the original article.

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Gold Coast

Gold Coast mega-mansion with private beach sells for $11.75 million

Gold Coast mega-mansion with private beach sells for $11.75 million

A Gold Coast mega-mansion with a private beach has sold for an eye-watering $11.75 million, blasting the city’s 2020 sales record out of the water and proving property pundits are still willing to splash big cash during the pandemic pandemonium.

Looking less like a home and more like a Thai resort catering to Hollywood royalty, the six-bedroom mansion Riverpoint, at 1-3 La Scala Court, occupies a gargantuan 2623-square-metre block on the glitter strip’s Isle of Capri, while featuring a cinema, seven bathrooms, tropical gardens and a tennis court.

The home was placed under contract by Amir Mian of Amir Prestige, and while co-selling agent Charlon Delos Angeles remained tight-lipped about the buyer, he said the incredibly short time on market was testament to the abode’s star-appeal.

Gold Coast mega-mansion with private beach sells for $11.75 million (2)

“It was launched just over three weeks ago … so when you’re looking at statistics on high-end properties, there’s only seven sales of this calibre a year and they normally just don’t sell this quickly,” Mr Delos Angeles said.

“We’re surprised it was such a speedy sale but not surprised because it’s such a unique style of home. It’s more of a resort and as beautifully photographed as it is, that’s nothing in comparison to a walk-through.

“There’s this beautiful running stream that feeds into the pool, and even just walking in you can hear it … As soon as you step through those doors, it’s like the overflow of feelings you get all at once. You’re in the middle of suburbia – you’re in Isle of Capri – and then you step into something that should be Thailand.”

Gold Coast mega-mansion with private beach sells for $11.75 million (3)

Mr Delos Angeles said everything about the magnificent mansion oozed getaway vibes – from the wellness centre with space for a private masseuse to the countless outdoor entertainment areas that lapped up pristine views.

While that luxury X-factor attracted global buyer interest, he said the city’s prestige market was continuing to enjoy international attention and barely paused for breath during the pandemic.

“We have had increased inquiry and people are starting to look at the Gold Coast as a safe area … and I’m sure that Australia is a really good investment right now because of the dollar,” Mr Delos Angeles said.

He felt the sheer opulence on offer in prime waterfront hotspots was a major pull for the city, and said they were nothing short of thrilled to have clocked such a high ticket sale in such a challenging time.

Gold Coast mega-mansion with private beach sells for $11.75 million (4)

While Riverpoint may be far from the Gold Coast’s overall price record of $27 million (achieved in 2008 at Mermaid Beach), it remains the stuff stay-cation dreams are made of.

Taking up an impressive 90 metres of main river frontage, the home boasts multiple indoor and entertainment areas, a kitchen to make Gordon Ramsay swoon, three powder rooms, a wellness retreat and five-star bedrooms that boast sweeping water views.

To add to the Oprah-level extravagance, there’s also a private beach, a pontoon, a 10-car basement garage and a boat ramp.

Gold Coast mega-mansion with private beach sells for $11.75 million (5)

Prior to Riverpoint, the top sale for 2020 on the Gold Coast was a $6.75 million Paradise Point home that was snapped up earlier this year.

 

 

 

 

 

This article is republished from www.domain.com.au under a Creative Commons license. Read the original article.

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Gold Coast

Gold Coast Apartment Sales Pick Up, Supply Falls Off

Gold Coast Apartment Sales Pick Up, Supply Falls Off

The Gold Coast apartment market has transitioned into the Covid-19 crisis in a much better position than it was going into the global financial crisis, planning and advisory firm Urbis says.

In its latest quarterly survey, Urbis found that the Gold Coast market was tracking well, recording 265 sales in the first quarter of 2020, sitting above the two-year quarterly average of 238 sales.

The weighted average sales price also lifted by 10 per cent over the quarter to $809,811, buoyed by strong pre-Covid sales.

Urbis said that over the year the Southern Beaches Precinct recorded the highest sales rate, yet a recently launched projects in Surfers Paradise had rebooted enquiry and transactions in the Gold Coast Central Precinct.

Over the quarter 64 per cent of a sales were to owner occupiers and only five per cent to overseas buyers, while interstate investors accounted for 19 per cent of sales.

Urbis senior consultant Lynda Campbell said the current environment had pushed developers to reassess projects to ensure they are ready for changes in the market.

Gold Coast Apartment Sales Pick Up, Supply Falls Off (2)

“It is more important now to make sure projects are targeting buyer demand in order to weather the storm,” Campbell said.

“Projects with a high exposure to the investment market will need to put in place solid pre-settlement work to maintain a strong settlement rate.”

Urbis said the city had also benefited from a shift in sentiment in recent years, favourably trending away from large developments targeting international investors and instead towards smaller boutique projects, targeting owner occupiers.

Moving forward the market is tipped to remain resilient, further supported by low interest rates, a low level of supply and a higher level of product aimed at the owner occupier market.

Worryingly, the supply of new apartments remained relatively weak at 1,000 apartments, the lowest level recorded in over five years.

“There is a pipeline of projects ready to launch over the next six months, but whether they do will be something to watch,” Campbell said.

“If project launches slow, this will put pressure on the current supply.”

Urbis said it would be watching fourteen forthcoming projects containing approximately 1,160 apartments due to settle throughout 2020 closely to see if the Covid-19 border restrictions were impacting the market.

“The next quarter’s results will be highly anticipated,” Campbell said.

“Interest rates are still low, and there is not a large volume of expensive product aimed at investors, as was the case going into the GFC.

“Though we expect sales to slow, conversations with developers suggest that enquiry is still strong.”

 

 

 

This article is republished from theurbandeveloper.com under a Creative Commons license. Read the original article.

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Market Place

Property price slashing has doubled and tripled in Australia’s biggest cities

Property price slashing has doubled and tripled in Australia’s biggest cities

Property price cutting has nearly doubled and tripled in Australia’s two largest cities, new data shows, signalling a slowing housing market.

More than 13 per cent of property listings in Sydney and 10.7 per cent in Melbourne had their prices discounted in April, according to Domain data.

This was up from 6.7 and 3.7 per cent respectively from April 2019, equating to nearly double the amount of discounts in Sydney and almost three times the amount in Melbourne.

“It’s a good leading indicator of where prices are going to go,” Domain senior research analyst Nicola Powell said.

“When you see an increase in the proportion of listings with a discount, it normally means that you’re going into a softening market.”

 

March saw a jump in the proportion of listings discounted which has eased in April

Percentage of live listings with asking prices discounted

Property price slashing has doubled and tripled in Australia’s biggest cities

All capital cities across the country saw a higher percentage of properties being discounted in April 2020 compared with April 2019.

But the percentage of discounted properties was the highest in March this year as the economy went into a rapid hibernation amid the escalating COVID-19 outbreak.

“March was particularly a turning point, we saw that in other market indicators and the fact that we had the ban on open homes and auctions and the economic shutdown,” Dr Powell said. “The positive thing for April is that percentage has now started to ease.”

All cities besides Darwin and Hobart saw more than 10 per cent of listings discounted in March, with Sydney reaching 14.1 per cent and Melbourne 12.6 per cent.

Adelaide was the next most marked-down city at 11.1 per cent in March, while Canberra, Perth and Brisbane saw between 10 and 10.6 per cent of properties take a price cut.

In April, all cities saw the percentage of properties with price cuts slip – with all besides Sydney and Melbourne seeing property discounts of less than 8.3 per cent.

Dr Powell said the few new properties listed in April were potentially priced more competitively than those in March, which were likely to have been listed earlier in the year in a rising market.

“We were perhaps seeing vendors coming to the market being a little bit more bullish in terms of the prices they wanted to achieve,” she said.

 

Most capitals had a jump in listings discounted in March with fewer properties discounted in April

Percentage of live listings that have had the asking price revised down

Property price slashing has doubled and tripled in Australia’s biggest cities (2)

While the percentage of properties with price reductions was higher than it was during the 2017-19 downturn in Sydney and Melbourne, Dr Powell said the dollar amount reduction was relatively similar.

“When you look at the percentage of price edits, it’s actually more or less the same, and in some cities the percentage is actually smaller than this time last year,” she said.

Most capitals saw prices revised between 3 and 5 per cent, with Hobart slightly higher at 5.2 per cent and Darwin recording a higher percentage of 8.2.

 

While the number of listings discounted jumped, the amount of the price discount has eased

Percentage of median price edit

Property price slashing has doubled and tripled in Australia’s biggest cities (3)

Property price slashing has doubled and tripled in Australia’s biggest cities (4)

Sydney’s Northern Beaches region, which includes suburbs as far south as Manly and as far north as Palm Beach, saw the highest proportion of discounted properties in the country at 17.6 per cent in April.

That number was up from 10.5 per cent in April last year, and from an 18-month low of 5.8 per cent in September 2019.

Prices in the area were coming down from a high peak (the median house price in the area is $1.97 million, up 18.6 per cent on the previous year), Joshua Perry from Belle Property Dee Why said, which meant widespread discounting was expected.

“There’s always some owners who aren’t adjusting, but most are now seeing that what is happening now is a fair price,” Mr Perry said.

He said inspection and auction restrictions being lifted meant there was more confidence from both buyers and sellers.

 

A rising number of listings have prices discounted during downturns

Sydney, percentage of listings with prices discounted against annual house price growth

Property price slashing has doubled and tripled in Australia’s biggest cities (5)

The Mornington Peninsula and Melbourne’s inner south saw the highest proportion of discounted properties in Victoria and were tied for the second-highest across the country, along with Newcastle in NSW, at 14.3 per cent.

McEwing Partners director Dean Phillips said the Mornington Peninsula had seen a high number of holiday homes turn over since the beginning of COVID-19 restrictions with people becoming more realistic about the price of their properties.

“They’re not trying to profiteer as they were prior to COVID,” Mr Phillips said. “They’re selling for genuine reasons and we are seeing a return to a genuine real estate market.”

The regions where prices had been discounted the most deeply included Shepparton in Victoria where buyers could expect a 9.4 per cent discount, Daly – Tiwi – West Arnhem in the Northern Territory at 9 per cent and the Southern Wheatbelt in Western Australia at 8.7 per cent.

 

 

 

 

This article is republished from www.domain.com.au under a Creative Commons license. Read the original article.

 

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