Australia Weighs in on When the Market Will Recover
When do Australians think the property market will go back to normal? It’s a question that seems to be little more than curious musings, but there’s substance beneath the surface. Firstly, it gives us an indication of how well Australians understand the property market. Or, rather, it will when time reveals how accurate they were. Right now there’s no wrong answer, since even experts can only estimate what COVID’s overall impact will be. But perhaps more importantly, understanding the general populace’s thoughts on the housing market can give insights into consumer confidence.
It’s (always) a good time to be in Queensland
For Queenslanders specifically, there’s optimism aplenty. Research from realestate.com.au (REA) revealed of all buyers in the country, it’s those in the Sunshine State who are most confident. Unfortunately, that optimism isn’t yet translating into increased sales activity. In the three-month period to May 31st, sales volume in Queensland dropped 29.18% from the previous three months.
March through May represent of the most uncertain phase of COVID in Australia, so it’s no surprise there was a drop in activity. Data beyond May is mostly still being collated, but early indications suggest sales volume is rising. Levels aren’t yet at pre-COVID figures, but that’s likely the result of understandable wariness. Queensland has so far avoided a second outbreak, unlike our friends further south, but the threat is ever-present. High confidence may lead to a huge increase in volume when the coast is clearer.
Looking at Australia more broadly, however, REA recently surveyed 5,000 of their visitors to gauge sentiment. Questions included whether it’s a good time to buy or sell and, crucially, when respondents think the market will start to return to normal.
Results from the survey
Participants were surveyed across four key date ranges, and a curious pattern emerged. Those who were interviewed most recently believed it would take longer for normality to return than those who responded earlier. For example, 12% of early May respondents believed the market would be back to normal in three months’ time (by early August). And yet, only 6% of July respondents made the same three-month prediction, despite that being a later forecast of early October.
As time went on, participants believed more and more the market would take a longer time to recover. Of the latest respondents, from early July, 40% believed it would take over a year for housing to be back to normal. The earliest respondents made that same prediction at a rate of only 29%.
As time went on, Australians became more aware (or perhaps less optimistic) of the long-term effect of COVID. Part of the increase undoubtedly came as a result of Victoria’s second wave, which was in full swing by early July. That doesn’t, however, account for late May and June’s respondents being less optimistic than early May’s. 23% of those first respondents believed market normality would return in six months. Of the second group, surveyed later that same month, the six-month prediction was down to 20%.
There’s no normal, and the time to sell is now
Alone, that data suggests confidence is lowering, but other results from the survey say otherwise. Of the early May respondents, 68% of the property owners felt it was a bad time to be selling. Meanwhile, 15% thought the opposite. Property owner respondents from July, however, who were convinced the market would take over a year to recover, were considerably more confident. 53% still thought it was a bad time to sell, but 25% said otherwise. In both cases, all remaining respondents weren’t sure.
These two findings seem counter-intuitive. Australians are accepting COVID’s effects will last a long time, while also believing it’s time to trade property. The obvious conclusion drawn from these observations is rather than waiting for normal to return, Australians accept we’re already living in the new normal. They believe, it seems, it’s possible the housing market we knew will never return. After all, roughly 2% of all of those surveyed responded with “never”, when asked when normality would return. Though even more cryptically, around 6% said COVID hadn’t had an impact at all. Clearly, uncertainty abounds.
The REIQ have pulled together property’s brightest analytical minds to share their views on the quarter past, as well as what’s in store for the rest of the year and beyond. They will share insights, as well as answer your questions in a lively panel discussion. Register for the REIQ’s Property Insider webinar here.