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Covid-19: Buying a property during a pandemic

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We want to keep you up to date with the best and the most recent news around property, home loans, interest rates, and the like. As a result, we were thrilled to recently chat with Alice Stolz from the Domain Group, one of Australia's biggest online listings portals, Alice is Domain's national managing editor and she spoke to us about buying property during a pandemic.

In our Q and A session Alice outlined how auctions and inspections are changing, and new property trends driven by Australians working from home.

What does the new normal look like for the buying and selling property market and any changes that you're seeing at Domain's side?

It's obviously changed completely. People have been corralled into having to change the way they transact, whether they want to or not. We've got a lot of things shifting at the moment.

First of all, the way we transact property, that is still happening and obviously it's important to say from the onset that transacting property is still going ahead there've been absolutely no regulatory changes to that. I think at the beginning, people wondered, "Can I actually buy a house?" Yes, you can. And you also can sell your house. It's considered an essential service.

So buying and selling can be done, but the way you view property is changing. People are looking online for properties, they'll then contact their agent. What then happens is the OFIs or open for inspections that we used to enjoy so much on a Saturday morning have been sort of paused in many areas.

How are property inspections changing?

As of now, your agent will usually give you a walkthrough inspection, if you request that. Some listings will have virtual tours, which means a couple or a buyer can actually look from the comfort of their own home and navigate the house and look through every nook and cranny, which I think is really has been quite empowering for a lot of consumers to be able to better view properties that way.

If you request another inspection, then the agent will walk through, and you can say to the agent, "Excuse me, can you go back there and point the camera up and look at that crack in the ceiling wall? Well, what is that?" They can really delve quite deeply.

It feels like yesteryear that you'd have 30 or 40 people walking through an open home. Those days are over for the time being, and look, I don't think that's often a bad thing. I think having more controlled groups and sort of at the right pace is probably not a bad thing for agents and potential security of a household. So, that has shifted. That's also been lifted in WA and Queensland as well. So this is literally changing every day at the moment, and we expect further changes.

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How have property auctions changed?

The other big fundamental change is public auctions were paused. So this is an Australian pastime and something that is such part of the color and the theatre of transacting property is auctions. They have been paused for now and they're being conducted online. However, that's now changed in New South Wales.

The way auctions are conducted will be a little bit different, there'll be small pools. Everybody has to be registered. So there are still limitations around it. When we get sort of tire kickers who come up the street and kind of lean back on a car and sort of throw their hand in the air, no. It's going to be a much more formal process.

But again, I don't think all those things are entirely bad and the way that agents have adapted has been really quite reactive and quite progressive. It's a big ask that we're suddenly tasked with buying and selling in a very different way than what we have done for over a century.

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How does the online auction process work? How does it differ, and how do I need to prepare?

One needs to be a lot more organized when it comes to bidding at an auction than what you may have been able to get away with in the past, and which is not necessarily a bad thing. Previously, in certain states you could not even register before an auction and just put your hand in the air and potentially buy a property.

Now you have to preregister with an agent. They'll usually also ensure that your financing is rock solid. What we don't want is anonymous bidders potentially bidding, and just sort of doing lots of sneaky things in the background, you have to be an approved, registered bidder. So again, you need to get your finances in order prior to wanting to purchase a property. And then I think you need to kind of keep your wits about you because you're not going to have that magical chemistry that often does exist in an auction with an agent.

There's so much, I think in public auctions where you do feel the heat of the emotion, you eye off the bidder across the road. Whereas now, you're going to be on your sofa, probably in your slippers, with a tablet or on your laptop in front of you making this massive purchase. So you need to think differently about it.

It’s actually quite helpful that buyers can hold back when they need to, do the sums on the back of the envelope, quickly confer with another person in their life who's helping them make this decision or if they're buying with someone else, instead of getting carried away in the heat of the moment.

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What about selling your home?

Obviously, for people who are selling their house that will change the result in some cases. Emotion is a huge part of transacting property and that's probably why auctions are so magical. So there are a lot more people sort of involved behind the scenes and what you need is a really good agent who's also an amazing auctioneer to generate heat and buzzing competition and is also tracking what's happening with each bidder.

Behind the scenes in the agencies, auction houses, there's a lot of people sort of beavering away, tracking what is going on, but I think you just need to go into it with a sort of knowing and a mindset it's going to feel quite different, but it can still be done. And it is just generally, like any other sort of business transaction that you're doing.

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What's going on around clearance rates and stock, what are you seeing at Domain's side?

Clearance rates did plummet because they had to, people were withdrawing to sell their property because they could not legally sell their property properly. As we said, many agents have moved to online portals, different States are also relaxing those auctioning rules. So what happens in that space is going to probably quite quickly evolve.

I think a lot of this comes back to consumer confidence. Whether people want to sell now is reliant on people feeling confident that they're going to get the result that they want in this current market.

And that's reliant on people feeling secure in their jobs or not feeling threatened by unemployment as to how much people will actually have the appetite to transact. So I think as well as looking at clearance rates, we need to look at listing numbers and what's happening on that front.

We need to also look at where and how people are buying. Some people are doing off market purchases, some people are doing purchases by private treaty also. So there are different ways that people are transacting. And as I said, I think for a country like Australia where auctions have been such a part of our DNA, Melbourne and Sydney largely do transact through auctions so they've taken the biggest hit in that space. I think just to look at clearance rates is a bit sort of irresponsible at the moment and you need to look at other factors playing into that.

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How has working from home impacted property?

I think we are also seeing another trend bubbling up of where people are purchasing at the moment. So while metro listings are down, we are seeing a lot of interest within Domain outside of metro cities. People are now thinking, Is now the time to make a change and are exploring properties outside their sort of footprint of where they had traditionally looked at buying before. Because all of a sudden we're all sitting here saying, I could actually do my job from anywhere. Whether or not employers are on board with that, we'll have to wait and see. But I think employees are feeling quite plucky and thinking, I could be living anywhere right now.

If we're trying to find a silver lining to this awfully dark cloud that we're under, I genuinely think that people are feeling quite empowered by the decisions that they make and the lifestyle that they want rather than it being dictated to where their office is based or what school catchment they feel they have to live in.

And I think we've got a lot more clarity around what's important to us now. We're seeing the same around schools and I think people under financial pressure are thinking, Maybe I am better to live in a house in great school catchment rather than living in a house with a private school that I have to now pay an arm and a leg for that I don't know that I can afford going forward.

Lastly, what are your thoughts on stamp duty being abolished?

Australians are really reevaluating all those decisions when it comes to purchasing property. Though the cost of transacting property is still high. There's a lot of chatter at the moment around what will happen with stamp duty. Will any government be brave enough to think about removing it and replacing it with the land tax?

There's so much change going on at the moment, but I think things like that are playing into people's minds. If you didn't have a hefty tax like stamp duty, selling would be a lot of a simpler process and a cheaper process than what it currently is.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

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