Welcome to our monthly real estate report for November 2020
As we head towards the end of 2020, the post-Covid property rush continues to surge ahead for our beautiful region. With not enough property listings to meet demand, even with the spring listing surge, we have experienced, prices have continued on their upward trajectory. The interest rate cut seems to have put ‘more fuel on the fire’ so to speak, as Bellingen remains a hot spot for anyone looking for that ideal tree change lifestyle. Be it the bottom range price-wise for a property, or the higher ‘prestige’ end, any new listing to the market we have found is receiving an exceptional amount of genuine enquiries.
The first thing I’d like to touch on is the residential rental market for our Shire. It really seems to be at critical levels, in the 25 odd years I’ve been in the real estate industry in the Bellingen Shire, this is without question the lowest vacancy rate I have experienced. I know our rental department has been sitting on a vacancy rate of virtually zero for a good couple of months now. The amount of people looking for a home only to receive a call from us to be disappointed really is heartbreaking to our staff, especially when it’s the more disadvantaged people in our community. If only we had more properties! We have found the main factors being, of course, more people wanting to move to our area, more and more permanent rental properties being converted to holiday type accommodation such as ‘air B&B’, and an influx of landlords moving back to the area into their once rental homes. All these factors seem to be creating a distinct shortage in available rental accommodation in the Bellingen Shire, with a lot of renters making the forced decision to relocate to other areas.
One question I had floated to me recently, and its one we get regularly, was should I buy a property now? Or wait until the market cools? I guess with this there is no real correct answer that anyone could give, it’s like being guaranteed to buy shares at the bottom and sell at the top if anyone knows that can they contact me! Other things that may be factored into the answer would be ‘what is your motivation to purchase? Is it purely an investment purchase over a short term, or are you buying a home for your family to hopefully spend the next 10 or 15 years in? My opinion is to buy when you can afford to. Based on previous property cycles for our area, prices seem to seldom go backwards too much, and unless you get put in the unfortunate position of having to sell when a property market is slow, then generally things work out ok. Our experience is we find people buying a home for themselves to live in seem far more comfortable in paying a premium for a property, as opposed to pure investors.
An interesting National group of statistics were released recently as well which really would come as a pleasant surprise to everyone, and that being distressed sales, or forced sales, have dropped back to pre-Covid levels in almost all cities. Despite Australia recording its deepest economic contraction since the 1930s this year, new data from Domain has shown that distressed listings in October were at their lowest levels since the Coronavirus pandemic hit, in all capital cities bar Hobart. With ongoing government support measures and extended mortgage holidays providing a buffer for those facing financial difficulty, Sellers in most cities were actually in a better position than in February, even with some initial six-month mortgage holidays coming to an end.
Another thing I’m sure most of you have noticed on the news the past few days is once again NSW stamp duty is in the firing line for some changes. This one seems to pop up almost every election as well! A lot of economists have been pushing for it to be scrapped for decades. On reading the proposed legislation, which could even change by the time you read this, there is a proposal that upfront stamp duty could be replaced by an annual tax based on the value of the land. I’d think, like any changes we make to a tax system, there will be winners and losers. At the end of the day, the government’s money will need to come from somewhere. In relation to the effect it would have on housing prices, I find most buyers we deal with seem to borrow as much as they can, which includes the stamp duty amount. So if that amount is scrapped, I wouldn’t be surprised if property prices bumped up even that shade higher.
One other question that we get, be it a good market or bad, is in relation to what commissions are being charged by agents. Since deregulation, back in the 1990s (from memory), consumers now have the upper hand, where there are not a set ‘fee-by-law’ and commission rates can be negotiated. Consumers can now weigh up what service they are set to receive from each agency and negotiate accordingly. Generally, in cities with multi-million dollar sales & super quick sale periods, we find rates range from 1% to 2% + GST, and regional markets in that 2% to 3% + GST range. From a consumer’s point of view, the more homework you do, the more comfortable you will feel when a decision is made to appoint an agent. Each consumer will have different requirements on what they need, and it’s up to you to find the right fit. I guess the best way to look at it is ‘what are you actually getting for your money?’
On the last point, here’s a quick comparison example:
Agent 1 is a part of a professional team; has an office where you or buyers could easily access and are always contactable if someone is away; has polished and wide-reaching promotion; and has a number of sales agents all dealing with their group of buyers and other departments that could handle customer enquiries such as property management.
Agent 2 works from home; has limited exposure on say only on 1 or 2 websites; has no backup support and only deals with their single group of buyers.
With the obvious drop in customer services and the higher risk that buyers may be missed, leading to a lower sale price and a higher risk of extended sale times, Agent 2’s commissions realistically should be considerably less than being offered by Agent 1. So do your homework sellers! All the information is readily available these days thanks to the Internet.
Once again our beautiful little Shire still seems to have escaped the Covid-19 anarchy that a lot of places around the world are still dealing with. What a great year it’s been for anyone that has been lucky enough to call the Bellingen Shire home.