The Australian real estate market is continuing to defy doomsday predictions of price drops as a result of the COVID-19 pandemic.
Prices are continuing to grow and the number of people searching for properties online is higher than it was at the same time last year, according to Terry Ryder, founder of Hotspotting.
“All the data that is coming in actually defies the doomsday notions we’re seeing in news media,” said Ryder, speaking during a webinar broadcast with depreciation specialist Peter Foldes of Washington Brown.
“Certain sections of the media in particular have been talking down real estate – and we’ve had dire predictions over the past two months about prices falling – but we just haven’t seen it in terms of the actual price data.”
Ryder said new figures from the nation’s largest property sales platform, realestate.com.au, showed increases of up to 40% (compared to the same time last year) in the number of searches of properties for sale.
“People are certainly out there looking, at a time when the number of properties listed for sale has fallen significantly, and that might explain why the data on prices for March and for April was so strong, with six of the eight capital cities recording some price increase in April, as well as six of the seven regional market jurisdictions.”
Tax depreciation expert Peter Foldes of Washington Brown said the factual data from the market had been a lot more positive than expected and there were many reasons to be optimistic about how the market would perform in May and beyond.
Foldes said the level of inquiry from investors for Washington Brown’s services was encouraging.
Ryder said the nature of the local economy was pivotal in terms of which markets will continue to do well, which ones will stagnate and which ones might experience price drops.
Those markets which might experience price drops were ones where the economy was heavily reliant on tourism, particularly international tourism.
“My expectation is that the Gold Coast market will be one of the ones to drop, certainly in the short term,” Ryder said.
But he said strong regional cities with more diverse economies such as Ballarat, Bendigo, Orange, Albury-Wodonga, Mackay and the Sunshine Coast should continue to perform well. These are all cities where the local economy and employment are strong is industry sectors that are doing well in the virus-impacted climate.
For example, the biggest sectors in Albury-Wodonga in terms of the number of jobs are supermarkets & food stores, hospitals & medical services, the military and aged care.
Mr Foldes said the Sunshine Coast had one of the major factors which appealed to investors, massive infrastructure projects – and work on those had not stopped during the COVID-19 shutdown.
Current infrastructure projects on the Sunshine Coast total more than $20 billion.
“The ticks are in the ‘pro’ column of why you would be looking at a region like that for investment,” he said.
Foldes said it was important for investors thinking of entering the market at this time to not get swept up in the doom and gloom expressed by news media and to keep a balanced view of what was happening.
Ryder agreed there were opportunities to be found in the current market.
“I think it is a very good time to be looking because there will be opportunities to buy well,” he said.
“Generally speaking, real estate is holding up quite well but there will be exceptions.
“If you are out there as a buyer right now you are not going to be competing with as many investors as you might have done in normal times. You can perhaps negotiate from position of strength.
“I think it is a very good time to buy, as long as you select a location that has the underlying fundamentals to provide good growth.”