Expert insight: How COVID-19 is impacting the Chiswick property market and opportunities for buyers and sellers
Given the peculiar times we living in at the moment, we thought you might enjoy reading some candid insights from our Principal John Mctavish. Whilst he hasn’t seen a pandemic before…he’s not that old!, he has seen the ebbs and flows of the property market over the last 40 years and we thought his insights would be worth sharing.
We sat down with John and over a cup of coffee, threw a few questions at him. We hope you find his perspective on what happening in our local area and where the opportunities lie is valuable and refreshing.
How would you describe the Chiswick property market at the moment?
Currently there are not a lot of properties on the market and buyer interest seems to have spiked in the last week or so with 16 people through one of our open homes last weekend.
Sellers seem to be taking on a ‘wait and see’ approach and with some banks offering mortgage repayment holidays there don’t appear to be any COVID related forced sales in our area at the moment, which is a good thing for property owners.
From a buyer’s perspective, we have been receiving multiple calls and emails over the last few weeks from buyers who are keen to upgrade or downsize from their current property. Combine this with the fact banks appear to be keen to lend to buyers at the moment as investor lending demand has dried up a bit.
So in a nutshell, what we are seeing is a buyers who are cashed up and ready to buy, but not a lot of stock on the market, although indications are that this is about to change with more inquiries from sellers and spring now upon us.
What is happening to prices in the area? How has this changed since the start of COVID? How would you describe demand?
Prices are certainly down a little from 6 months ago but given that it is winter we expect a slight dip in this period anyway. I think the lack of really good properties is causing buyers to be more critical, but they are quite bullish when it comes to top quality properties. If you need to sell I think sooner is better than later as the future is more uncertain than I have ever seen it.
Where do you see opportunities?
Unless Mum and Dad left you a few million dollars I think First home buyers should think the same way as investors. In fact, over 40 years in this industry I have seen some very astute property owners make their first purchase a property to rent out. I would recommend to get into the market as early as you can….That may seem obvious but many people wait until they can afford to live in what they buy and many more won’t buy something they wouldn’t live in. The real genius buys the first property they can afford, yes that may be a run-down 1-bedroom unit in the far reaches of the worst suburb in their capital city but guess what? They will have a 4% mortgage with a 5% return (est. figures mid 2020) and It’s probably half the purchase price they were considering. On top of that the tenant and the government will help them pay it off. In the meantime, they can rent a nice property from another owner in a nice suburb where that owners getting only 2.5% return and paying crazy strata fees also.
As with any major purchase or investment I highly recommend you get advice from a qualified accountant and make sure you disclose to them your own individual circumstances and cashflow needs.
But if it’s capital gains you are looking for then the Inner west should be in your sights at the moment, and that’s a different story.
Is there any advice you could give to landlords and tenants during COVID-19?
Just some advice to owners and tenants alike who may be in difficulty and need of rent adjustments and other considerations, please listen to your real estate agent, be completely open and honest in describing your situation and ask for what you would think is fair if you were the other party.
Owners should try to get to a neutrally geared ratio or perhaps even talk to a broker (not a bank) about how they could better structure their portfolio. Make sure your property is rented at whatever price, remember 1 month vacant is the same cost as an 8.3% rent reduction over a 12 month lease – you can decide if you want to give a reduction, but the market will force you to take the vacancy. So, don’t delay decisions and make sure your agent is always focused on getting a great quality tenant.
By the way, just while I’m on my high horse, there are still some landlords out there who think an agent is there to collect the rent. At Riviera Real Estate, we do are much more than that. We make sure you are not at risk of being sued, make sure you get the greatest return possible, keep your property in great shape and at maximum value, and reduce your vacancy to the absolute minimum. Collecting the rent should be the least of your worries so don’t worry about it and don’t be tempted to look for the lowest commission agent you can find. That decision will most likely will come back to bite you!
Have you found the Chiswick real estate market to be fairly resistant to significant price drops, if so, why do think this is the case?
Over the years I think the answer to that is yes, because it has a higher percentage of owner occupiers and a lower turnover (longer ownership) than many suburbs. Having said that prices appear to be at a low at the moment with our peak being reached at the end of 2018 through to the middle of last year.
So, on balance it’s probably a better time to buy rather than sell. Usually though, the decision to sell is driven by non-market factors so some people will still need or want to put their property on the market.