What’s happened in residential markets week one of Level 3

The country’s real estate agent population is bracing for a time of uncertainty in the coming months, according to an agent survey conducted during Alert Level 4 lockdown by Trade Me Property. 

The majority of agents (65%) in the COVID-19 Property Market Report, said it was going to be harder for people to buy and sell after the restrictive Level 4 conditions lifted. Over half expected it would take the property market 12 to 24 months to get back to normal due to the toll the crisis would take on the economy.

The survey sent midway through the Level 4 lockdown, found one in five participants agreed or strongly agreed that Covid-19 had made their future in the industry uncertain. However good numbers of agents were able to continue operating in the market during Alert Level 4, with over two thirds (63.6%) of participants taking enquiries from new clients during the five week period and over a third (34%)  continuing to give market appraisals to vendors.  

On the plus side, 93% of participants had an active plan in place to succeed post lockdown and a confident 30% of participants felt they were more likely to sell property due to COVID-19. This was especially true of Auckland agents. 

   

Banks will play an important role in easing the pain

According to the COVID-19 Property Market Report, the property market will face long term impacts  from the effective shutdown of the economy during Alert Level 4 which has led to financial uncertainty after job losses, strains on mortgages, cautious buyers and sellers, inventory levels and sales volume increasing or decreasing, and more online sales and marketing. 

One agent respondent’s list of worries included, “a lot of uncertainty, a possible lack of funding for purchasers, an inability for first home buyers to raise their deposit with the loss of KiwiSaver values, and some having to sell through an inability to make repayments on loans.”

Banks would be key in helping homebuyers and homeowners through this difficult time, said a number of the 334 agents polled in the survey. 

“They will hold the country to ransom if they do not approve loans quicker than what they have been doing. Time for them to pull their finger out! Let’s see how positive the banks will make the industry bounce back,” said one respondent.

Over two thirds of agents thought property prices would be impacted by the Covid-19 pandemic, the survey found, agents predicting vendors and their agents were likely to come under pressure on price,  from “opportune buyers.”

“Supply and demand may be turned on its head for a period,” predicted one realtor.

Real estate professionals would have to manage expectations, and hold their nerve in the coming months, added another participant in the survey. 

“It will be up to agents to be confident and strong, to hold prices as firm as possible. We won’t see the true impact for three to four months,” they said.

   

How agents are finding Alert Level 3 business

Prompt action from buyers and offers in the market was expected post Level 4 lockdown after strong interest from buyers pre-lockdown and this appears to be happening at Level 3.

Checking the pulse on agents back to business in the first week of Alert Level 3,  those in Auckland, Wellington, Dunedin and the Waikato, were reporting heightened activity in the first few days of the new Alert Level 3 conditions in which private viewings are permitted once more. 

“I am overwhelmed with buyers,” said Tanya Kwasza, an agent with Ray White Newmarket. 

With two private viewings a day per property, Ms Kwasza says the calendar is booked out on some listings, with particular interest in a couple of attractive waterfront homes, one in Panmure and one in Parnell.

9A Tohunga Crescent, Parnell

   

The agent is telling clients, if they were considering selling, they should sell now, as there could be a slowdown in a few months' time.  

Bayleys Metro Dunedin agent, Alice Munro, said there was a very positive surge in Dunedin from before the lockdown, a big pool of people that needed to buy and sell - and they were back in the market now “with a lot of attitude”. 

In Dunedin, it’s a good time to buy with LVRs lifted and low interest rates, she said..  

“Wanaka has more listings than Dunedin – in the next couple of months we’ll hopefully see continued sales and strong buyer demand and a good amount of listings,” she said.

It’s about making the most of the current activity, she added. 

“Any good agent will be working as hard as they can, doing as many viewings and as many listings, getting as many sales on the board as they can as we don’t really know what will happen in six months’ time,” she says.    

Munro, who has 3D walkthroughs on 70% of her listings has private viewings booked out for the week, and is working hard to qualify those wanting private viewings as much as possible.

   

Opportunities post lockdown

Almost all agents in the Trade Me Property survey had put a plan in place for when lockdown ended and for a number in the survey, they flagged some opportunities in the market for lower priced homes and investment properties as well as properties offering lifestyle benefits. 

“The higher value homes in the provincial towns will either attract those looking for a safer haven from the bigger cities or expats returning for the lifestyle,” said one respondent.

Waikato agent, Peter Tong, founder of More-Real Estate in Cambridge, said he had received a lot of enquiries from expats “who were not quite happy with where they are” and were thinking of returning home.

Wellington Ray White agent Alice O’Styke added, her team had seen a huge lot of views of their properties from overseas Kiwi buyers currently based in places like London, Sydney and New York. 

One canny respondent in the COVID-19 survey meanwhile suggested new markets might spring up for retirement options that are self-sustaining and cheaper but not located in a retirement village which have had a hard time with COVID clusters in some parts of the country. 

Mr Tong says he was receiving strong enquiries from local and regional buyers for his retirement-friendly Cambridge listings, including this beautifully renovated Thornton Road home which buyers were racing to see. 

   

No signs of prices falling yet 

As pent up demand for properties is unleashed throughout the country, Ms O’Styke says she was still seeing quite a bit of buyer confidence out there. “People are putting offers in, cash offers and they are getting good terms. There are options right now.”  

The Ray White agent’s team sold a Mt Victoria home during lockdown for a good price of $1.2 million. Bargain hunters, who put bids in for $900,000 didn’t get far. 

Ms O’Styke expects Wellington to come out of any early recession quite well because of the perennially low volumes which characterise the city’s property market. And the employment sector is helped by Wellington being the seat of government and having a good community of high tech workers. 

The expectation is that the Government will have more to offer the economy as the election approaches, she added.

   

Some new digital habits and tools adopted for good over Alert 4 lockdown

The Trade Me Property study’s respondents said they expected to see more of the real estate journey to go online post COVID-19 lockdown. 

“The more of the process that can be put online the better. The challenge is real estate business owners not wanting to lose control,” noted one survey participant. 

Ms O’Styke says virtual tours worked well during lockdown, and that was all that an expat buyer needed to make an offer on the recently sold Mt Victoria home. She sees this continuing. 

At the same time, agents are putting together more comprehensive information online packets for buyers from LIM reports, building reports, she says.

As agents of varying IT skills raced to become more tech savvy during lockdown Alert Level 4, virtual open homes and 3D tours became very useful in helping agents continue to do their business during the five week period.

The property industry would now see a change with “fewer face to face transactions, more electronic transactions, more digital marketing options and wider uptake,” said one survey respondent. 

More online qualifying of homebuyers and more demand for online services by buyers might be another consequence of this period of lockdown, suggested another.

Online chat, video messaging, digital contracts, online valuations, document signing tools, floor plans and the ability to book private viewings, were also mentioned as tools they would like to continue to use.

Respondents predicted that video and drone technology, online auctions and software that vendors can use to create virtual tours of their property and directly upload, were going to be used more. 

Online training had also worked well in the down time - webinars from various trainers attracting good attendance.

    

Listen to wise heads

In the coming months agents will be looking for good advice from experienced players in the industry and business commentators such as well known economists, to help them get through the coming months.

Ms Kwasza said that less experienced realtors will want to turn to agents who have experience, who have gone through the tough times of the GFC and survived.

Ms O’Styke, who works with experienced Wellington agents Andrew Brodie and Pano Focas, says they have told her, “All you can do at times like this is weather the storm and go back to the basics, be helpful, make sure you are doing a good job.”