We are only just starting to see what impacts COVID-19 will have onthe housing market, and it will take some time before we truly know how long and how deep the coronavirus issue will run. You could say the biggest X factor is what the time frame will be before things return to normal, or the ‘new normal’.
Some of the greatest impacts on the property market will be the rise in unemployment, and the negative sentiment caused by high levels of uncertainty.
We saw an initial drop in auction clearance rates as a result of the sentiment change following the first lockdown announcements, and it’s likely we’ll see further contraction in buying and selling activity now that open houses and in-person auctions have been banned.
Like any disruptive change, the broker response to this issue will vary from person to person – and brokers, like all of us, are working through exactly what COVID-19 means for them. But many are taking the leap to prepare their businesses for this new period.
What will be particularly important for brokers during this time is careful management of their financials, and prudent cost management will be critical. Equally important will be ongoing customer contact.
A key point to remember is that our industry is far better off than many industries in which incomes have been decimated overnight. There is a lot of uncertainty felt by many in the community in terms of financial security, and this is where brokers can really shine.
Right now, brokers should be focusing on how they can help customers understand any financial options available to them if needed due to hardship, and looking at restructuring or refinancing options as required. There are likely to be many clients in most brokers’ portfolios who would benefit from the great rates off ered by many lenders. In fact, we expect refinancing to be a key focus area in the coming months.
Obviously, the state and federal governments also have their role to play, and they have announced a number of stimulus packages to help bolster the housing market.
It’s important to note that there is no silver bullet. With the assumption that the virus won’t last forever, it is my view that we need to buy time, and that’s why stimulus initiatives that support small business and help keep people employed make a lot of sense.
Some of the biggest impacts on the property market will be the rise in unemployment, and the negative sentiment caused by high levels of uncertainty
The flexibility shown by lenders around hardship has also been a positive. If we can push out the financial impacts, we can reduce the recovery period for the economy, which will benefit all.
From a policy perspective, I am hoping to see a review of a number of taxes, in particular stamp duty and local government fees on developments. I believe this should be a long-term change, not just short-term.
It’s not just the government’s responsibility to get us through this period; it’s also up to all of us to act responsibly. Right now, it’s time to batten down the hatches, both physically and financially.
Overall, while we do expect to see a decline in housing sales and auction results, the main question is around the depth of the decline. That said, the sooner we see the virus brought under control, the sooner we will see a return to positive property markets.
Until that happens, in my view, it’s best to follow the advice of the federal government, which is taking guidance from world experts.
My advice to brokers is to assume that we will need to operate under social distancing measures for six months at least. Rather than thinking about this as a short-term disruption, that we’ll be through within weeks, thinking about this as a longer-term play effectively does two key things. Firstly, it helps you to mentally adjust and get your head in the right space, and secondly it forces you to act now to adjust the way you work.
Social distancing and isolation are currently the right things to do, but under normal circumstances ‘isolation’ can have quite negative connotations. Most of us are social beings, and we need the company of others.
With this in mind, we need to ensure we are looking out for each other now more than ever. Never hesitate to pick up the phone if you just want to have a chat with someone. And when speaking to others, remember to ask the simple question: “Are you OK?”
There are so many ways we can still be interacting, whether it’s by phone, text, email, FaceTime, Zoom, or other media, so ensure that you continue to keep in touch with your colleagues, clients, peers, friends and family.
CEO of Choice