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Property experts share COVID-19 market predictions

A group of property experts have shared their views on how COVID-19 will impact Australia’s property market, with most indicating the greatest effect will be felt within three to 12 months but many still believe by this time next year prices could be higher than they are at present.

As part of a survey by Ripehouse Advisory, 146 property professionals responded to a series of questions about COVID-19’s impact on the sector.

Ripehouse Advisory CEO Jacob Field said university academics, industry body heads and real estate agents were among the professionals who responded.

“To help paint this picture, we turned to our extensive network of Australia’s most trusted property professionals,” Mr Field said.

“The opinions and statements in this document provide a frank assessment of a drastically changed property landscape.”

Asked questions like ‘which state would be hardest hit’ and ‘what sector of the market would feel the impact most’, 27 per cent of respondents indicated they believe in 12 months prices will be higher than they are now.

Meanwhile, 72 per cent of respondents felt that NSW would be hardest hit and short-term residential rental properties, like Airbnb and holiday homes were in the firing line.

High cashflow and diversified rooming houses on fixed term leases were highlighted as the most resilient while the majority of respondents felt that the peak COVID-19 impact would be felt between the 3 to 12-month mark from mid-March 2020.

The analysis also revealed that of the respondents, 42 per cent felt that lower socio-economic areas such as those on the outer ring of Sydney would be most impacted.

The study then took a deep dive into which Australian suburbs would be impacted the most and which might prove the most resilient.

Impacted by short-term letting

The study identified 76 suburbs that were likely to be most impacted by the downturn in tourism nationally by looking at criteria like holiday home and Airbnb concentrations and vacancy rates that were increasing rapidly.

In total they found 389,437 dwellings were potentially affected across 37 suburbs in NSW, 11 in Victoria, 23 in Queensland, and five in Tasmania.

“Eleven of these suburbs have already seen a more than 20 per cent reduction in asking rent,” the report noted.

They found the hardest hit suburb was Balgowlah Heights in NSW, which has seen an almost 3 per cent increase in vacancy rate and over 33 per cent reduction in asking rents.

Northern Beaches getaways like Palm Beach NSW also made the list, with almost 15 per cent of all properties listed on Airbnb in late March 2020, and a 29 per cent drop in asking rental prices.

Impacted by employment

The study also identified 69 suburbs most impacted by the dramatic rise in unemployment in the retail, hospitality and tourism sectors, assessing criteria like high concentrations of residents who work in those industries and dramatic decreases in rental asking price per week.

Researchers found 609,628 dwellings were potentially in the firing line across 27 suburbs in Queensland, 17 in NSW, 13 in Victoria, six in WA, four in Tasmania, and one in both SA and NT.

“Five of these suburbs have already seen a more than 20 per cent reduction in asking rent,” the report said.

Places like Chippendale, Centennial Park and St Peters were among the hardest hit in NSW, while Gold Coast suburbs were among those affected in Queensland.

Safe haven suburbs

The study then went on to identify areas considered safe havens, finding there were 55 suburbs most insulated from COVID-19 nationally.

Criteria used to identify these suburbs included highly diverse economies, few Airbnb properties, currently low vacancy rates, asking rent per week holding through to today, low new housing supply in the approval pipelines, above average per capita project (public/private) spend – IE. on new roads, hospitals, education, commercial etc.

These safehaven areas encompassed over 260,085 dwellings in 30 suburbs of NSW, 10 in the ACT, six in WA, six in the NT, and one each in SA, Victoria and Queensland.

Avalon Beach topped the list in Sydney, Albert Park was considered the safest in Victoria, Longreach was looking stable in Queensland, Watermans Bay in WA also looked steady, while Hughes led the ACT.

A full copy of the report can be downloaded here

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