Breaking into Canberra’s real estate market was already a struggle, but the current foreclosure has made buying a home even more difficult.
As of yesterday, foreclosure restrictions have eased on real estate companies, which are now allowed to show a person a property to perform inspections, film or take photos to help advance a sale.
But while some moves in the market are good news for Canberrans trying to sell, buyers will have to take more risk than usual.
What are buying and selling like during lockdown?
It is estimated that more than 350 properties could not be listed in the first two weeks of Canberra’s lockdown.
“Over the past four weeks, we have seen the number of new listings in ACT drop 16%,” said Eliza Owen, Australian research manager at CoreLogic.
“In the auction market, we have seen fewer properties auctioned and more properties taken down completely.”
But while yesterday’s changes mean many homes can now be put up for sale, experts warn against expecting a sudden influx of properties on the market.
“[There is] some people resist putting their property on the market for a while until they feel it is safe to do so, ”said Craig Bright, Director of Total Property Management.
And if sellers are worried about putting their home on the market, many buyers are likely to be even more nervous.
Individual physical and virtual inspections are still not allowed – so buyers will have to pull the trigger before they even set foot in their new home.
But, according to the Real Estate Institute ACT, it’s a risk many will be willing to take.
Ms Owen said with low housing stock in Canberra and prices continuing to rise across the city, taking a risk was the only option for many potential buyers.
Could containment lower prices?
Unfortunately for buyers, the current foreclosure is unlikely to lower housing prices in the capital.
The annual median price in most Canberra suburbs has increased by more than 20% from 2019 to 2021, and prices have increased every month since April 2019.
“You don’t get a huge influx of offers and that’s usually what would put downward pressure on prices.”
Mr Bright agreed, saying there had been a significant shortage of stocks in Canberra since before the COVID-19 pandemic.
“If these properties are commercialized, it will not significantly reduce the supply,” he said.
“From what I can see in the data, there is still pent-up demand from people looking to buy a property.”
Virtual auctions, a popular alternative
Homes that were on the market during the foreclosure have sold, with many agents reporting a virtual auction liquidation rate of 100%.
Australia’s preliminary clearance rate fell to its lowest level in more than a year last year, but Canberra turned the tide with a clearance rate of almost 80%.
“The clearance rates on virtual auctions have been very high and many of them have been for buyers who have not been able to physically inspect the property,” said Mr. Bright.
Online auctions have been so popular that some agents have taken the “very unusual” decision of requiring potential bidders to put $ 1,000 into a trust account before being allowed access to the auction – a measure designed to reduce the number of “curious neighbors” or other parties who are simply there to watch the show.
The practice also occurred during last year’s lockdown, to help screen serious buyers of “sticky beaks” in a crowded virtual room.
“If this was an open link, you could end up with a lot of people,” Mr. Bright said.
“It is very difficult for the auctioneer to decipher or keep track of genuine bids under these circumstances.”