Thinking about buying and/or selling your home in Orakei, Glendowie, St Heliers, Kohimarama, Mission Bay or Remuera?
Well, wondering how the market has changed as a result of COVID-19? Everyone certainly is, but let us share some insights on what we think has changed.
More focus on hygiene practices and qualified buyers
We are all very thankful that New Zealand is at Level 1 and we can go about living our life as per normal before COIVD-19 hit.
In April 2020, when the whole country was in lockdown, there were just 36 sales that transacted in the Bays including Orakei, Kohimarama, St Heliers, Mission Bay, Glendowie & Remuera. In May 2020, there were 76 sales. This is at least a 40% drop from last year. Buyers might think that sellers should now be welcoming them with open arms. However, please understand that this is not going to be instant.
Not every seller may be comfortable with strangers going into their home. While New Zealand has no community transmission, we are still getting new cases due to people coming back to the country. Take the recent case of the 2 ladies who drove from Auckland down to Wellington. They came into contact with hundreds of people who then came into contact with many others. This puts people at risk.
Therefore, sellers may still feel nervous about their potential exposure. As buyers, you might be asked to remove shoes, use hand sanitizer and anti-bacterial wipes, and refrain from touching anything in a private residence during a showing.
Buyers might also be asked to keep the viewing time to a minimum — 30 minutes versus an hour spent sitting on the couch or standing around the kitchen island and envisioning their lives there.
Some sellers might require buyers to give their travel history. Others might require that only buyers who are pre-approved and have the right budget proceed with viewing. So please don’t be offended if real estate agents have to ask a few more questions regarding your financial situation. Under such circumstances, sellers have the right to understand the risks posed to them with each visit to their home.
This could continue on for many more months to come until a vaccine is discovered. So please be patient with sellers, especially those who are in the vulnerable category. We all need to do our job to protect those around us.
But to vendors who are thinking of preparing their house on the market (using unique marketing strategies of course), you can expect less tyre-kickers and more serious buyers.
It's becoming more digital
The lockdown has resulted in Bauer Media, the publisher for Property Press, pulling out of New Zealand. For a while, even after the lock down was lifted, there were no Property Press publications.
During that time, everyone turned online and properties still sold, and many for good prices.
We have always been strong advocates of digital marketing and we believe that this pandemic only hastened what was inevitable. More people are going to be looking online at properties. In fact, online is the best way to capture passive buyers given the number of hours people spend on their phones or laptop every day.
What it also means is that videos have become alot more popular. Having a video can generate a lot more interest on the property, as videos allow real estate agents to bring across things that are not tangible or obvious from photographs. This includes the warmth of the sun shining down the house, the friendly neighbourhood with yearly street parties or how ergonomic a kitchen can be.
Videos being marketed online also allow buyers to share it with their family members or other important stakeholders so that they can all make a decision. We are also looking at Facebook Live, Zoom ‘inspections’ etc. It’s a whole new landscape altogether.
With this switch to digital marketing, you would require real estate agents who are adept at navigating the online landscape, so that you stand the best chance at having a short, sweet and successful campaign to get top dollar.
Put it this way: would you trust a surgeon with modern medical equipment or another using 19th century equipment?
It's taking a little longer
Due to COVID-19, real estate transactions can take a little longer.
This is due to a couple of reasons.
- Finance is taking longer. What used to take a bank 3-4 working days is taking them 10 working days. Processing times have increased because banks are swamped with applications. With low interest rates at 2.69%, most people are finding that it is better to be buying than renting. Coupled with a month in lockdown where not much happened, banks are now dealing with a backlog of cases.
- Finance is not so easy to obtain. Banks are asking more questions re applicants’ employment situation. They might ask for your latest pay slip or even more questions re the stability of your job. Some banks might have lower risk appetite. This means buyers need to gather more documents before finance can be approved.
- Your buyers might not be confident enough to buy your house first without selling theirs, especially if they have a problematic house. Some buyers are only conditional. They might have a big piece of land that needs to be sold first before they can purchase yours. This would lengthen transaction times as their house is not so saleable in this climate, and this could impact potential transaction times.
Now is not the time to try to take advantage
The media has been talking down the market for months, saying that high unemployment will result in a crash of the property market.
As a result, some buyers might be tempted to throw out multiple low-ball offers at sellers to see what will stick. Buyers might feel as if they are entitled to a deal during these unusual circumstances. Stop.
While buyers certainly can negotiate, trying to rub salt in the wound of what’s already a trying time will not be appreciated or celebrated. Don’t approach an offer with the intention of playing to a seller’s vulnerabilities or an overblown (by media) sense of despair in the market.
Everyone is in unchartered territory, and this is an uncertain time on many levels. No one is exempt. Consider making a fair offer. You might be surprised to find that you will get further with a seller that way, versus starting ridiculously low and asking for pie-in-the-sky concessions.
It could be that the seller responds in a pleasantly negotiable and flexible fashion, perhaps a bit more than they normally would. Buyers could get a reasonable discount from the asking price by taking a more level-headed and respectful approach instead of trying to squeeze blood out of a turnip.
And if buyers choose to believe that the market is headed for a crash, then they are likely to keep missing out on properties and end up not buying. This is because if you examine the numbers carefully, the high unemployment numbers are often a result of temporary workers losing their jobs. In fact, some people, as a result of this pandemic, has doubled their business. This is not a situation where everyone is affected equally.
Often times, sellers also have other options than to sell for an absolute bargain. They have the option to put their loan on interest only, or take a mortgage deferral or the government’s wage subsidy will come in handy. There’s always the unemployment benefit. Homeowners tend to have more equity in their homes now, for one thing, and the current crisis isn’t linked to risky lending practices as it was a decade ago. The Reserve Bank has removed LVRs for a year. Very few sellers are that desperate and if buyers try to approach every house with a predatory mindset, then it is going to be difficult to close a deal.
Or you can always continue missing out on properties and enjoy renting for a long while and pay down your landlord’s mortgage while the landlord enjoys the full benefit of low-interest rates.
Accept that you might not have all the answers
This one is tough. It can be easy to panic at the thought of the unknown. Will things get better or worse towards the end of the year?
Although outcomes are uncertain at this time, there are processes we can control. This means staying the course and not reacting in a knee-jerk manner to every headline or “breaking news” update. It’s all breaking news, no matter the channel, designed to get mesmerizing attention 24/7.
While things might appear to be doom and gloom right now, it could be a dramatically different and positive picture a few weeks from now.
If clients are in a position to do so, they can put the current mortgage market to work for them. Never before have buyers been able to leverage their purchasing power, and for sellers, this same purchasing power may enable a buyer who is able to get into their first home, a move up property due to a low trade-up premium or their ultimate luxury dream home.
No matter what, it’s important to remember that everyone has to live somewhere. Our homes have never been more important to us than right now. They are a place of solace, respite, work and the ultimate shelter from the storm — no matter what kind of storm that is.
At the end of the day, our home is the one sacred place where we can work through our deepest fears and challenges, rejoice in the happiest of times and simply relax and be who we are without fear of judgement or criticism.
Found this post useful and have more questions?
Work with a team with a unique marketing campaign to maximise your chances of success.
Do not hesitate to contact us for a no-obligation discussion over coffee on your future plans to either buy or sell.