INDUSTRY NEWSNationalNEWS

Omicron hits the real estate sector

With more than 600,000 active cases of Covid in Australia, and the Omicron variant surging across the country, the impact on the real estate sector is now becoming more evident.

Real Estate Institute of New South Wales (REINSW) Chief Executive Officer, Tim McKibbin noted the Omicron Coronavirus variant was affecting the industry in a variety of ways, with the rental market stalling, a host of legal issues to wade through, and staffing now becoming an issue.

Mr McKibbin said on the market side of things, the New South Wales rental market had stalled, with the REINSW Vacancy Rate Survey results for December 2021 indicating residential rental vacancies have remained low across most of New South Wales.

“The impact of the Omicron variant is being felt everywhere and the residential rental market is not immune,” he said.

“We certainly expected to see a lull in the market leading into the festive season, however REINSW members are reporting that this usual lull was exacerbated in December because people are hesitant about the future as Omicron continues to spread. 

“As a result, many are delaying their plans to move, leaving the market in limbo.”

Many have also gone into self-imposed isolation, where they avoid going out due to fear of exposure to the virus

“Consequently, we are not seeing people actively pursue rental properties.”

In the meantime, Mr McKibbin said there were new challenges to navigate, especially for property managers with tenants who contracted Omicron and were in quarantine as their lease expired.

“So if their lease is coming to an end, people are saying, we have to stay where we are. But you can’t automatically extend a lease,” Mr McKibbin explained.

In the case where a lease was ending due to a property sale, he noted this was proving particularly challenging.

“When a rental property is sold and the new owner is looking to move in, the vendor has to provide vacant possession at settlement. If the tenant doesn’t move out, the vendor is in breach of the contract.”

To manage these scenarios, Mr McKibbin said agents and property managers were working hard to find a suitable outcome.

Behind the scenes, Mr McKibbin said one of the biggest issues emerging for the industry was a shortage of staff.

“I’ve been speaking to a lot of members who have 30 to 40 per cent of their team either isolating or sick with Omicron,” he said.

“Depending on how well they are, many of these staff are working from home, but there’s a good percentage who aren’t able to continue their duties.”

As for whether the sales market will be impacted by Omicron, Mr McKibbin said it remained to be seen.

“It is not yet evident whether there will be a slowdown in sales,” he said.

“We saw the market finish 2021 strongly, with auctions up until a few days before Christmas. I hate using this word, but that really was unprecedented.

“Coming into this year we are still waiting to see whether the market will fire back up. We expect to see indicators in the next week or fortnight.”

Victoria

While Victorians might be well-versed at navigating Covid and lockdowns, Real Estate Institute of Victoria (REIV) President, Adam Docking said staffing was proving a huge issue for the industry in the wake of the Omicron variant.

The problem is particularly prevalent in property management, which Mr Docking said was a sector at the centre of a “perfect storm”.

“Victoria has probably been the hardest hit out of everyone when it comes to staffing,” he noted.

“That’s not only because of Omicron, but because of last year’s ongoing lockdowns and the introduction of the new Residential Tenancies Act, which had around 120 changes.

“Together this has affected the mental wellbeing of PMs and we’ve seen about 30 per cent leave the industry.

“It’s the perfect storm. Over the past year or so a lot of PMs have also had to deal with lockdowns and people unable to pay their rent. They’ve had to liaise with landlords with no income and VCAT has been over-capacity.”

Mr Docking said these issues had also resulted in flow-on effects, with landlords selling their investment properties.

“It’s been one thing after another,” Mr Docking reflected.

Whether the sales sector will be impacted by Omicron is still unclear, he continued.

“It’s really too early to tell. At the moment we’re just getting over the Christmas rush which started as soon as lockdown six ended.”

But he noted, virus safety did seem to be top-of-mind for people looking at properties, who were asking members whether there were protocols they needed to be aware of when attending inspections.

In general, Mr Docking noted Victorian sales agents were well-versed at adapting to Covid challenges, with many still using both online and digital platforms as part of their sales campaigns.

“The real area where Omicron will affect sales agents is in forward-planning,” he said.

“They might have appraised a property for an auction mid-February, but have to have a conversation with their vendor about what will happen if there’s a Covid outbreak at the real estate office.

“Personally, we’re planning that every campaign is a multi-agent campaign just in case one agent gets Covid or is in quarantine.

“There’s been a change in thinking, that it’s ‘when’ we get it rather than ‘if’.”

Queensland

Real Estate Institute of Queensland (REIQ) Chief Executive Officer, Antonia Mercorella said despite rising Omicron cases, the Queensland market had “kicked off the year with a bang”, with demand for properties remaining high throughout what is traditionally a quiet period.

“Having said that, the border reopening over Christmas has prompted a rise in Covid cases, and that’s certainly creating challenges, but trading is still going ahead.”

Ms Mercorella noted she was hearing occasional cases from members where older or immunocompromised vendors were requesting private property inspections, rather than open homes.

“But that’s the exception, rather than the rule,” she said.

“On the rent side, it’s a bit more challenging and we do have instances where tenants are coming to the end of an agreement, and therefore the agent is trying to secure a new tenant, but the existing residents are concerned and specifying that people should be double-vaccinated to enter the property.

“Of course, we can’t exclude people based on vaccination status, so we’re trying to develop education around that.”  

Ms Mercorella said rental repairs and maintenance also presented some challenges, particularly when it came to emergency works on properties where people might be isolating or in quarantine.

“Unless it’s an emergency, tradespeople should not be entering, but we are hearing that many electrical firms or other emergency trades don’t want to send their people in.”

On the staffing side of real estate, Ms Mercorella said Queensland was yet to be fully impacted.

At present, she noted many offices had converted to a work-from-home model, in line with State Government advice.

In the sales space she said there were already signs of staff shortages but the industry remained skilled at adapting.

“Real estate agents have proven very sensible in the current environment. They are following the rules, have strict hygiene measures in place, are maintaining occupancy limits and care about safety.”

Her advice to members moving forward was to stay up to date regarding the changing situation.

“It’s about respect and showing our communities and our staff that we care about safety,” Ms Mercorella said.

“Queensland real estate agents have been blessed, really. In the past 18 months, agents have experienced the best market we’ve ever had and we need to be thankful that as a general rule of thumb, we have been able to forge ahead.”

Real Estate Institute of Australia

Real Estate Institute of Australia (REIA) President Hayden Groves said his east coast counterparts had relayed that rising Omicron cases were impacting the real estate market.

“I can echo Tim’s comments that yes, there is some constraint coming into the market due to the rise of Omicron COVID-19 cases spreading through the communities,” he said.

“People will be nervous about making a real estate move, either to buy or to rent, which is a consideration for practitioners.

“But we have learnt quite a lot with COVID-19 since it first arrived on our shores in early 2020, and agents showed their ability to adapt and adopt new technologies, and do things in a more virtual and digital space.

“I was really impressed with the way that agents innovated and I think there will be a similar thing here.”

Mr Groves said in the bigger capital cities such as Sydney and Melbourne, vacancy rates were on the rise at the same time as Omicron cases were expanding, which was exacerbating the feeling of tenants not moving around as much.

He said it could become harder to fill the vacancies that did come up. 

Mr Groves noted that during the pandemic many people had left Sydney and Melbourne for cities such as Brisbane and he said as Omicron cases rose, people in the eastern states may look to move to WA once borders reopened.

“I imagine, as Omicron continues to spread, and states like WA keep it out for a bit longer, we might see a bit of movement from the east coast to the west,” he said.

South Australia

Real Estate Institute of South Australia (REISA) Chief Executive Officer Barry Money said the rental market in the state had also stalled.

“I would concur with Tim’s comments around tenants,” he said.

“I think tenants are certainly extending and not looking at changing up their shelter at the moment.

“But I would suggest that that’s a continuation of a trend rather than a new trend. Vacancy rates are so low that it’s actually been quite hard to find rental properties in the metro area and a lot of regional areas in South Australia.

“I think Omicron has really just compounded and exacerbated that trend.”

Mr Money said on the sales side of the equation, listings wouldn’t pick up until next week, after the traditional Christmas and New Year lull.

“I think the key thing is the working habits and protocols of our agents,” he explained.

“A lot of them have moved to working from home protocols or, alternatively, rostering half the team in (the office), half the team out or buddying between different branches.

“We’re starting to see some of those best practices coming to the fore.”

Mr Money noted that Omicron hadn’t affected  South Australia as much as Australia’s eastern states, but he said agents had started to see “a smattering” of clients requesting private inspections.

“But I don’t think it’s as prominent as in some of the other states, such as Victoria,” he said.

Western Australia

Real Estate Institute of Western Australia (REIWA) President Damian Collins said the industry was operating at “98 per cent business as usual”, but were under no disillusion that Covid cases would soon rise.

“There’s a few cases of Omicron floating around but the reality is that it’s coming,” he said.

“Whether it’s next week or on February 5, when our borders open, it’s coming. So agents are getting prepared for that.”

Mr Collins said he expected to see a dip in market activity when cases start to rise, but he expected it to be short-lived.

“I expect we will see a little bit of a short-term dip in terms of volumes, listing volumes and sales volumes,” he said.

“It is going to be a shock for people over here because we really haven’t had it in the community. People will ve a bit nervous temporarily, but then they will start seeing people get it and 99 per cent of their friends and family will be fine and life will get back to normal.”

Mr Collins said the WA economy was strong and borders reopening would help fill jobs, with the state experiencing a labour shortage.

But he said Omicron shouldn’t affect the state long-term or impact property prices.

“Fundamentally people are in a good position financially, prices are cheap, we’ve got a shortage of stock for sale and the lowest vacancy rate in 40-plus years,” he said.

“People will go back to normal real estate after that initial shock and adjustment period.”

Northern Territory

Real Estate Institute of Northern Territory (REINT) Chief Executive Officer Quentin Kilian said about one per cent of the state’s population had been infected with Covid and there had been little impact on the property industry at this point.

“As the numbers rise it could change the way property managers go about their business,” he said.

“But at this point in time there hasn’t been a major impact on the PM community and the way that they interact, with the exception of with the mask mandate for indoors, they’ve had to be more conscious about inspections and whether or not a tenant wants to be present or wants to isolate.

“So they’ve got to change their methodology a little bit to adapt to individual circumstances.”

Mr Kilian said the state’s vaccine mandates, along with mask wearing and Covid safe principals, such as social distancing, agents and property managers used helped make clients more comfortable.

Australian Capital Territory

Real Estate Institute of the Australian Capital Territory (REIACT) President Hannah Gill said rising case numbers hadn’t really affected the Canberra real estate market.

She said while some tenants and buyers preferred private inspections, numbers at open homes were still strong.

“On the weekend a colleague and I did four opens and we had 50 groups through every single one,” Ms Gill said.

“That’s almost a challenge in itself, trying to proactively manage risk and manage safety when you’ve got those kinds of numbers through.

“Some people are obviously asking for private viewings, but in Canberra a lot of agencies were already using virtual tours after the last series of lockdowns. So I think we’re pretty well prepared and adaptable.”

Ms Gill said those who were attending open homes were diligent in wearing masks, checking in, social distancing and sanitising.

Show More

Cassandra Charlesworth

Cassandra Charlesworth is a features writer for Elite Agent Magazine with over 15 years’ journalism experience in metropolitan and regional newsrooms. She has a specialist interest in real estate, tech disruption and a good old-fashioned “yarn”.

Kylie Dulhunty

Kylie Dulhunty is the Deputy Editor at Elite Agent.