How to take advantage of lockdown as a homebuyer
Nearly half of Australia’s 25 million-strong population is currently under stay-at-home orders, with restrictions in place in Greater Sydney and Victoria. But despite the lockdown, the property market has remained relatively buoyant in our two largest cities.
Take Sydney’s auction results, for example.
CoreLogic reports that while auction withdrawal rates increased for the week ending 18 July, the preliminary clearance rate held steady at 77.1% – only slightly lower than the five-year average of 77.2%.
In Melbourne, it’s a similar story.
And if recent history is anything to go by, buyer activity will ramp up once restrictions ease.
How the market reacted to past lockdowns
When lockdowns first hit last year, many experts predicted property prices would fall by as much as 32%. These forecasts weren’t just wrong – they were spectacularly wrong.
Home values dropped just 2.1% from peak to trough in 2020, before accelerating 12.2% through the first six months of 2021, according to CoreLogic.
And one of the main reasons why the market has boomed rather than crashed comes down to supply and demand.
Both buyers and sellers sit on the sidelines
During previous lockdowns, both buyers and sellers stepped back from the market. For example, according to CoreLogic, between March and April 2020:
Sales volumes fell 33.9% across the country
New listings added to the market in April 2020 declined by 44.7%
So while home-buying takes a hit during lockdowns, listing activity does too – balancing out any impact on prices.
However, once lockdown ends, demand surges. Property transactions don’t just resume where they left off, there’s also pent-up demand to contend with.
CoreLogic estimates there were 582,900 property sales nationwide in the 2020-21 financial year. That’s the highest annual sales volume since February 2004 and 28% more than the decade average annual volume of 455,346.
What’s more, listing volumes haven’t been able to keep up – pushing up prices.
In June, total listings across Australia sat at 139,897 – significantly lower than the previous five-year average of 201,442.
Get a running start on your finances
Winter is traditionally a slow time for the property market. So there’s a good chance of an even stronger spring this year than normal, thanks to the pent-up demand and low supply discussed above.
You don’t want the market to run away from you. So take advantage of the current lockdown to get your finances in order by working with a good broker. They can help you:
Work out your borrowing power
Compare all your lending options
Get pre-approval on your home loan
This can put you in pole position when lockdown is over – so you can strike when the iron is hot.
What’s more, home loan turnaround times have been painfully slow this year, as the banks have been dealing with a significant volume of applications. So if you dally too long on readying your finances, you might find yourself still in the queue when the market gets competitive again.
Want to get your finances ready? Schedule a no-obligation consultation with Alex to find out how we can help you with your home loan.
