Andrew Bell’s Market Wrap: What Factors are Shaping the Market?

Issue 18 | Thursday July 30th 2020 | What Factors are Shaping the Market?

Hi, Andrew Bell here and coming to you today from this amazing block of five apartments at ‘Buna Shores’, 1453 Gold Coast Highway, Palm Beach. I will give you a little more information on the apartments in just a moment.

Generally real estate markets build slowly into a rising market, yet most commonly a boom in a real estate market happens from an X-factor event. An event that no one saw coming and that just comes out of the blue. A collapse in the stock market, a Global Financial Crisis that was triggered by the collapse of the Lehman Brothers, and so on and so on. It is rarely in slow motion and usually moves quickly. Everyone is looking at COVID-19 which seemed to come from out of the blue and from nowhere, yet the events have unfolded over a longer period giving people a lot more chance to analyze it, and so we are approaching a very important stage in this post COVID-19 period and there are some real trends starting to emerge.

Before going into that, this is a real good news story. This brand-new, never lived in building was an RSL Art Union Prize. A block of five fully furnished apartments made up of one 2-level penthouse, one 3-bedroom apartment, and three 2-bedroom apartments.

It is right in the heart of the hottest market on the Gold Coast, namely Palm Beach. Palm Beach is known to maintain its natural stunning beauty with a brilliantly relaxed lifestyle, meters from the beach, and central to so many wonderful lifestyle choices.

The prize winner will not be living in the apartments and therefore has put them up for sale with an Expressions of Interests campaign closing on the 19^th of August 2020. Our first open for inspections are this weekend between 9:30 – 10:30am, so please feel free to come and have a look.

Continue looking through the building as I just touch on those looming factors that will have an influence on our real estate market moving forward.

Currently, buyers are still very active in the marketplace and this is evident by the surge in buyer searches on Realestate.com.au which are now up 72.5% from the lows experienced at the end of April 2020. It is of course also reflected in strong sales activity right throughout the market.

The big challenge for buyers over the past 12 to 18 months has been very few properties listed for sale, but could that be changing? Apparently. There are currently limited signs of any distressed sales coming through the market, however mortgage payment freezes and other Government stimulant measures will come to an end in September and we are already starting to see the percentage of households in mortgage stress reaching 37.5%, which equates to about 1.42 million households. It suggested that as many as 100,000 could soon default on their loans. We are also keeping a close eye on the unemployed as they could trigger a debt servicing problem and lead to forced sales as well.

However, typically it can take 2 to 3 years for stressed households to either sell up on their own volition or get foreclosed, so we can expect higher defaults ahead given that unemployment is rising above 7%.

We are of course all very hopeful that JobKeeper will indeed be tapered down and not withdrawn entirely as people do need to be drip-fed off the dependence on both Government support and some Bank deferrals. We do not expect to see the pain of COVID reflected in mortgage arrears reporting in the Banks until the final quarter of this year as lenders are not required to include loans under COVID arrangements in their traditional reporting until the end of the mortgage relief period.

Now, another wildcard is what appears to be the second wave of COVID. With it being in Victoria, the engine room of the Australian economy, it really is a worrying feature of how quickly we can get back up and running again.

We are moving at a much slower pace and not seeing any immediate significant changes. Stock levels are still low although there are the earlier signs that they are rising, and buyer demand remains solid. The next 6 to 8 weeks will be a crucial time to see how both of those factors play out.

I trust you have enjoyed looking through these apartments. There is no better place to be buying on the Gold Coast than Palm Beach and I strongly recommend you get down and have a look at these as we have the most realistic of sellers who would like to see all 5 apartments sold prior to or by the end of the Expressions of Interest campaign. Please contact Jackson Paradise the marketing agent for videos and an information memorandum with all the details you will need.

That is all for this fortnight. We have been enjoying spectacular weather here through our central winter month and it is the weather that just reminds us why we feel so privileged to be living in this part of the world. It truly is breathtaking.

Let’s be super careful as we don’t want to see this second wave come through into Queensland and I am trusting all will be well in your world. See you in a fortnights time.

Warm Regards, Andrew Bell

Kind regards,

Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group

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