Chaos theory assumes that if a butterfly flaps its wings in Brazil, it can cause a tornado in Texas. Dan’s COVID-19 theory assumes if a bus driver sneezes in Nunawading it must cause a lockdown uptown, downtown, and all around town. Luckily, the real estate market seems to take these lockdowns in its stride. Lockdown 4.0 had no noticeably deleterious effect on the market other than to inconvenience us all once again. Public Auctions remained on schedule, while buyers adapted effortlessly to online Auctions for the duration of the lockdown. Homes have continued to sell speedily and robustly via Auction, Expressions of Interest, and Private Sale. People are out there, wanting to buy, waiting to buy. And with record-breaking increases in property values available to anyone canny enough to borrow money at record-breaking low interest rates... if not now, then when? The math has changed in your favour. Getting a loan at such a cheap rate has made the rental income of any property a much better deal than it once was. It’s also increased the borrowing power of people who simply want to trade up to a bigger home.
The RBA uses low interest rates to lift employment rates rather than to boost property prices. (That’s just a happy spin-off for property owners.) And it is hardly going to risk raising unemployment until this pandemic is some years distant in the rear-view mirror. The future for the property market looks then, like maintenance of the status quo... which is a world of vibrant increase and profit.
We just need more stock – but that’s our problem. And it’s natural enough. Any agent that does not need more stock in a really healthy market like this is not shifting property with the proficiency their clients would require.
At Abercromby’s we continue to sell over 70% of our properties using our distinctly discreet, focused methodology. Our acclaimed and eager sales team has recently sold these beautiful properties in the past week:
- 11 Montalto Ave, Toorak.
- 38 New Street, Brighton.
- 1/29 Tintern Ave, Toorak.
- 22 Tourello Ave, Hawthorn East.
- 13 Hedgeley Ave, Malvern East.
- 27 Bonview Ave, Malvern.
Ask one of the Abercromby’s team to utilise our experience and connections to maximise the sale potential of your home. Unlike elsewhere, our entire sales team will be eagerly involved in the sale.
House prices especially, have risen strongly over the last six months due to a current drift away from density – probably due to the new custom of social distancing transferring into a desire for domestic distancing. Let us call it “fear of corridors and shared ventilation systems” syndrome. Detached homes just seem safer to people at present.
If we were to have any more prolonged lockdowns without serious government fiscal support, the market might have its momentum dented. But with vaccines slowly reaching levels that make extended lockdowns unlikely, COVID-19 doesn’t seem a real risk to the market anymore.
After its monthly meeting on July 6, The Reserve Bank of Australia announced it is maintaining its cash rate at the historic low of 0.1%.
Cheap debt has seen transaction activity rocket over the past year to its highest level since 2004. New listings have amplified, but total stock levels remain low, because homes are being sold fast. Several market experts are predicting the market has passed through its peak rate of growth. They might be right. But none think the RBA will make any radical moves, and none see the property market as anything but extremely bullish in the long term. There will be cheap money easily available. So the slowing, if it arrives, will be negligible enough to ignore as a factor in investment decisions.
“Debt” was once almost a dirty word, a thing to be feared. But the world has changed and debt’s fangs have been pulled. Debt, now and for the foreseeable future, looks like a type of wisdom, and 0.1% is a powerful energy.
PROPERTY MANAGEMENT UPDATE
Not even the school holidays, a time when parents traditionally have their harried minds on other things, have slowed down enquiries for houses. At Abercromby’s we’ve fielded great interest in both large and small rental houses. Given this demand we are confident our property management team will be able to maximise the return on your property if you are contemplating becoming a Rental Provider.
The rental market for apartments is not as go-ahead as for houses. That said, we have recently leased a number of apartments that had been sitting vacant. Even with the international students and many foreign workers absent from the market, when owners of apartments meet the market price, a lease is quickly signed.
Abercromby’s vacancy rate has been coming down – largely due to the tightening of the housing market. There is a lack of demographic movement as a result of lockdowns, and as a consequence less rental properties are becoming available at present.