- On Tuesday, the Federal Government banned property auctions and open houses indefinitely to stop the spread of COVID-19.
- The decision was made ahead of what was supposed to be the biggest auction weekend of the year, with 3,065 properties pencilled in to go under the hammer.
- CoreLogic research analyst Jade Harling expects real estate agents to try to make sales over the phone or online instead, with this weekend the best indication of how the market will cope with the new restrictions.
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It was set to be the busiest weekend of the year so far, but now real estate agents are racing to sell thousands of homes without a single auction taking place.
On Tuesday evening, the Federal Government banned auctions and open houses indefinitely in its latest bid to stop the spread of COVID-19. In total, the ban will scrap each of the 3,065 auctions that were supposed to go ahead.
"Given usual auction methods are temporarily banned, agents may be looking to move to online solutions, or accept bids over the phone, with the aim to carry on with a ‘business as usual’ approach in these unprecedented times," CoreLogic research analyst Jade Harling said in note supplied to Business Insider Australia.
Exactly how many of those sellers might make it to market remains unclear. Last week, withdrawal rates climbed to around 8% as the spread of COVID-19 disrupted market confidence. With the number of confirmed cases in Australia rising to 2,423 on Thursday – more than twice what it was last week -- and with physical auctions now cancelled, Harling expects withdrawals and postponements to soar.
"After the weekend, we should have a better idea on how this is going to impact the auction market going forward," she said.
While the exact outlook remains clouded the coronavirus looks like it could put the property market largely on ice for weeks if not months as both buyers and sellers take a breather. As homeowners are offered six-month freezes on their home loan repayments, there likely will be little pressure to sell.
"Most likely, most now will be withdrawn, sold prior or rescheduled," Louis Christopher, founder of research house SQM Research, said in a tweet, suggesting a rise in private sales. "Some may see this as an effective trading halt on the housing market. It isn't. But all the same, listings and sales volumes will likely take a large hit until the crisis is over."
When normal buying and selling returns, Australia's economic state is expected to largely dictate the market. Rising unemployment could see prices drop by as much as 20%, according to AMP Capital chief economist Shane Oliver. Rents meanwhile could fall first as landlords seek long-term tenants to ride out the storm.
Exactly how sales fare this weekend may be the biggest indicator yet of just where we're headed.