Curious as to how Covid-19 is affecting real estate in your major city?
Speak to any savvy investor and they will tell you to invest in areas that benefit from infrastructure and increasing population. With this in mind, we wanted to explore the impact of Covid-19 on the Sydney CBD and their property markets. Let’s start by understanding the link between Covid-19 and the property market.
Rated an inspiring number 3 in Domain's Liveable Sydney study in 2019, the infrastructure of any major city is definitely a factor in the 'liveability' of an area, and is one of 19 indicators - that includes access to employment, schools and green areas - that the study uses to rank suburbs.
The not so good news according to Michael Kimmelman who wrote in the New York Times is how pandemics are “anti-urban”. This is because the things we value in cities, like density and connection, are the things that are least desirable during a pandemic and certainly, extensive studies done in the area back the notion.
Traditionally there has been a health penalty for living in cities and most certainly during a pandemic and historically, urbanites have paid a price for this vulnerability. Numerous academic studies have examined the link between pandemics and urban living. The Conversation, explores the way in which outbreaks like Coronavirus start in and spread from the edges of cities are currently focused on developing possible solutions to prevent and mitigate future disease outbreaks.
Studies unanimously agree that developing efficient and innovative methods of confronting emerging infectious disease without relying on drastic top-down state measures have the potential to increase connectivity, accessibility, liveability, commuting times, and even house prices.
All well and good, but with Covid-19 advancing its extraordinary grip on Australia, and particularly in NSW – how is it specifically affecting real estate in Sydney’s CBD?
As we know, group inspections and in-person auctions are currently not permitted. Yet a staggering amount of services available with a click of the finger, allow us to literally indulge in online home shopping.
I want to share with you the excellent work of Leanne Pilkington, Chairperson at REINSW, who looks at the ways in which the current Federal Government's response to Covid-19 is likely to impact the local property market.
“We can still continue working from our offices with many restrictions which we need to follow such as private only inspections and public distancing requirements. If we don’t manage this properly, we will get shut down! I was talking to one of my agents earlier today and he said, ‘this is actually not as bad as I thought it would be. It’s just back to basics, calling people on the phone, having conversations, doing buyer appointments, kind of back to the eighties!’ The good news is there are still people wanting to sell and buy.”
Realestate.com currently has 245 properties listed in the Sydney CBD area. According to Domain, “April 4 was due to be the busiest Saturday ever for the Sydney auction market but Saturday’s auction clearance rate dropped to a near-record low as a surge of vendors withdrew from auction in response to the government banning onsite auctions.”
"There are still a lot of buyers but because of the virus, they are a bit more conservative and looking to negotiate."
As a city resident who is always on the look-out for a bargain, I call to book a private inspection at 343 Pitt Street, a stone’s throw from where I live. I viewed this property a fortnight ago when agent Mary Wang from Ray Realtors ushered myself and two others in for the 12.00pm inspection - that was the last of the public inspections and Mary hasn’t had a single private inspection since. She said that there has been a good amount of phone queries and videos but no inspections. On a positive note, there are more enquiries from overseas buyers (both investors and expats) due to the Australian dollar and the number of bargains to be found. Being that the CBD is largely an area sought out by investors, this is a great sign!
Around the corner at 3009/101 Bathurst Street has been under offer since after the lockdown. Agent Justin Jiqing Ruan from JR Landing Zetland says “my understanding is there are still a lot of buyers but because of the virus, they are a bit more conservative and looking to negotiate. For the moment, high end properties above 2 million are still selling. The rental market is not performing well but the market will pick up as it approaches spring.”
Morton agent Steven Antoniou tells us he’s just listed a second property nearby in the Tower at World Square. “We have two there going to go to auction and still on the market. We also managed to sell a 2-bedroom for $3,000,000 on Macquarie Street. There are still buyers at the higher end of the market still interested. There is still plenty of activity, just not as much foot traffic!”
Spencer Sun from Sotheby’s International Realty took an offer for 1808/178 Thomas Street, Haymarket after the shutdowns measures were put in place and had 2 private inspections for properties over the weekend where he gave viewers the option to go through the apartment themselves while he waited in the lobby. He is happy to accommodate them any time and says that “enquiries are pretty good.”
The agents all agree on one thing - the buyers are genuine, qualified and ready to go! That being the case, many agents remain positive. Barry Plant auctioneer Jarrod Crouch says, “I’m not surprised buyers are still active. Compared to this time last year when no one could get money, it is much better!”
“What we’re seeing/hearing right now in the metro market is that competition is down, prices haven’t taken much of a hit yet, and new listings are still coming onto the market. A new category of buyer has emerged throughout - we’ve dubbed them the Panic Buyer.”
In terms of buyers Jiqing Ruan says that “there is a bit of self-justification - not as many people are ready to take that leap of faith or take that big step, because not everyone else is doing it. This tends to happen in any correcting market.”
"One of the things to come out of challenging times is innovation."
Antoniou adds that with a little bit of effort and care, plus a lot of technology, buyers will keep on coming to inspections and they will keep on buying. Exceptional tech options include 3D virtual inspections, the now ubiquitous 360-degree cameras and virtual caravans allow prospective buyers to have a “nearly as good as being there” home tour in real time with comprehensive commentary. The verdict is that people are still wanting to buy and people still need a roof over their head.
The savvy agencies have tripled up on their efforts. They’ve perfected the art of community hygiene, added in all the bells and whistles to their tech-tool kits but perhaps more importantly, they’ve adapted their human interaction.
What we are talking about here is the social responsibility, duty of care and due diligence of agents and their agencies. If they follow the rules and tick all the boxes and ensure policies are in place by ensuring that their customers' health and safety is their priority, then we start to see the emergence of a distinctive market where it is the norm to view properties virtually and encounter masked agents and gloved buyers during any property transaction.
If buyers choose to do it the old school way via private physical inspection, they can expect to find all the necessary procedures in place. Personal space and social distancing is respected and, in some cases, cranked up a notch as the good-humoured agents over at Ray White swap handshakes for jazz hands.
As Ms Pilkington says “one of the things to come out of challenging times is innovation.”