Investors are looking at their options with homes pulled off the market, leases extended and auction clearance rates dropping in-line with Covid-19 economic uncertainty.
Forty per cent of auctions were pulled from the market and clearance rates dropped to 51.4 per cent on the weekend according to Corelogic.
Buyers and sellers were urged to be cautious by the industry with vendors postponing sales, tightened bank lending, rising unemployment and a fear of “knee-jerk” transactions.
Announcements from the government further clouded the real estate market with landlords expected to give rent relief.
However wage subsidies and loan deferrals could ease their economic burden and the Australian share market rallied 7 per cent at the close of business Monday.
Domain senior research analyst Nicola Powell said sellers and landlords were weighing their options and what to do next in a downward market.
“We have seen new [for sale] listings start to trend lower, indicating vendors are taking a cautious approach as the economic outlook is uncertain,” Powell said.
“We are also seeing a lift in rental listings.
“Investors that had their properties as short term leases are now opting for longer leases because we’ve seen a dive in tourist numbers.
“A lot of overseas travellers have also decided to go home and left their accommodations.”
Powell said there was a massive sweeping change that affected the real estate market last week.
“From the announcement that happened mid last week a lot of auctions shifted to private treaty,” Powell said.
“Of those going on auction on 28 March [listed on Domain] we saw a 54.7 per cent change. Only 10.3 per cent went to virtual auctions.
“Three per cent of auctions were brought forward to before those [social distancing restriction] changes came into place.”
The government imposed restrictions which banned real estate auctions and open-for-inspections starting March 28.
It was set to be the busiest week of the year but the disruption saw only 2,599 actions go ahead from the originally scheduled 3,203 across combined capital cities according to Corelogic.
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Source: Corelogic Market Activity 29 March 2020
The Corelogic analysts said the surge in withdrawn auctions was anticipated, considering the rising level of uncertainty and the shift towards remote auctions.
“Considering the rapid transition to on-line auction formats, some agents reported technical challenges and connectivity issues; no doubt many of these challenges will be resolved with the benefit of more time to prepare,” they said.
“We also saw a surge in the proportion of properties sold prior to auction, lifting from 22 per cent of the preliminary collection last week to 36 per cent this week. ”
Overall they expected a substantial drop in new property listings, regardless of the selling method, as buyers and sellers retreat to the sidelines and wait for some certainty to return to their decision making.