By Herron Todd White
With 2020 drawing to a close, you’d be forgiven for wondering where the past 11 months have gone, especially given what we’ve ALL experienced with the Coronavirus pandemic, be it through a decrease or increase in business demand, restrictions on our civil liberties and social lives or most importantly, impacts on our health and loved ones.
At the beginning of the pandemic when the federal government began imposing immediate restrictions and state and territory borders started closing, there was some genuine concern that the residential property market would feel the impact of such measures. Historically the ACT has weathered past volatile market events well compared to other capital cities but this time around the concern amongst local industry participants was a bit more founded, largely due to the speed at which restrictions could be imposed, how the effects could impact multiple industries at a single time and that it did not discriminate – once thriving industries were brought to a standstill overnight.
In the initial few months of the pandemic, March, April and May, when general fear and uncertainty was at its most heightened and toilet paper was the hardest supermarket commodity to come by, the most obvious effects on the residential property market were the ban on in-person auctions and open homes. This along with a degree of pessimistic market sentiment meant that stock levels suffered, with sellers in a position to wait and see, withholding their properties from the market. Thankfully there was no increase in forced or mortgagee in possession sales seen locally, with most banks enacting temporary measures allowing mortgage repayment deferrals until late 2020 or early 2021. As a result, individual agents were reporting a lack of forthcoming listings and a slight reduction in enquiry levels amongst buyers. Prior to the pandemic, the conditions of the local residential market were fairly balanced with good demand for houses and moderate amounts of stock. On a ground level this was also noticed, with job volumes for mortgage security valuations for properties under contract decreasing and the majority of the job volumes being made up of mortgage security valuations for refinancing purposes, helped along by the cuts to the official cash rate by the Reserve Bank of Australia during this time. Another local trend picked up on during the pandemic was what felt like an increase in the number of homeowners renovating or extending their owner-occupied properties, with regular weekly valuation runs involving multiple valuations for the purpose of a proposed renovation or extension. Prior to the pandemic, such valuations were a less regular occurrence in the weekly wash of refinancing and under contract valuations, but the trend may be unsurprising given the shift in working from the office to working from home and a new need for an increase in living area.
As the second half of the year passed, Canberra was largely spared the COVID-19 cases seen in the larger cities, which meant some normality to certain industries was returned from June onwards. For the real estate industry this meant that auctions and open homes could resume under COVID-safe conditions. With a sizeable portion of Canberra’s workforce being employed in the public service and the local private sector offering services to or in some way benefiting from the many government departments in Canberra, local job losses weren’t as grave as in other cities. Baited buyer demand began making itself known again at auctions and open homes, however housing stock levels of established properties remained down on levels prior to the pandemic. In short, this return of demand and limited stock saw Canberra’s house prices remain unaffected by the economic impacts of the pandemic, spurred along by stable employment and increased competition amongst buyers for the limited properties available. Records were even set for some suburbs. In the case of Nicholls, a blue-ribbon suburb in Canberra’s outer northern district of Gungahlin, 2020 saw the suburb’s house price record set with the sale of 10 Wendy Ey Place for $2.025 million in August. This record only lasted a few months however, eclipsed by the sale of 11 Hendry Close for $2.475 million in November.
The local unit market has also remained unchanged from its position prior to the pandemic. That may sound positive but past issues of the Month in Review will reveal that market conditions for the unit market aren’t as good overall as the housing market. Market volatility is still greatest in apartments. As 2020 draws to a close, a large amount of new stock, particularly in the suburbs of Belconnen and Gungahlin that were under construction at the beginning of the year, have come onto the market with the new stock not absorbed finding itself competing against similar stock only a few years old. With such a high concentration of similar stock confined to single suburbs, apartment owners looking to sell in these areas may often find their properties competing against other apartments within the same complex or surrounding complexes at the same time, potentially having a negative impact on market values.
Looking back at what our local valuation team predicted for 2020 in the February issue of Month in Review, call it luck or the predictability of Canberra, it has mostly eventuated. The residential property market for houses remained steady and robust with prices across Canberra’s suburbs not showing any drops in value and properties of unique offering in desirable suburbs fetching record prices. The unit market, particularly apartments, performed as predicted remaining quite stagnant with growth often negated by the continual flow of new apartments coming onto the market.
In what has been a year of shock and surprise, one of the most surprising things our valuation team noticed was the stability and increase in job volumes. In the initial few months of the pandemic, as mentioned earlier, there was some uncertainty as to what it meant for our industry (valuation and property advisory services) and whether there’d be a noticeable decrease in job volumes or things would stay as is. Surprisingly job volumes remained stable and any movement from regular job numbers was a strong increase in requests for valuations, with valuers’ calendars being booked out up to three days in advance with full daily runs of multiple valuation jobs across Canberra and surrounding rural residential locations.
Speak with a Canberra Mortgage Broker today.