After almost five weeks of a Level 4 lockdown in response to the threat posed by the Covid 19 crisis, we’ve now moved to Level 3. For many people the differences between Level 4 and Level 3 will be barely distinguishable, but for home buyers and sellers they’re important.
In theory you could have bought or sold a house at any time over the past five weeks, but the process of doing that has been so difficult that most people haven’t bothered and most of the property deals transacted over this time have been those which were already in the pipeline prior to the lockdown.
One of the significant benefits of this has been that property values have largely been frozen in time over the past few weeks – neither going up, nor down. This is partly because there simply haven’t been enough transactions to measure a discernible change in values, and partly because no one is entirely sure what happens next.
So what does this mean, for you, as a buyer or seller? Here are a few tips:
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1. The market is open for business again
For the reasons that I’ll outline below – it will now be significantly easier to buy or sell a home. This means that if you were thinking about selling your property, you can now list again with confidence that there will be buyers back in the market. If you’re a buyer, predictions of a flood of listings from distressed sellers are unlikely to materialise because of the support measures which have been put in place by the banks. Instead, expect a slow but steady increase in listings over the next few weeks.
2. Property viewings are back
During Level 4 it was almost impossible to view a property other than online. Under Level 3, viewings are permitted albeit under tightly controlled circumstances. Open Homes will still be a no-no, but you can now organise private viewings with an agent. This is great news for both buyers and sellers.
3. Hot markets will be much cooler
If you’re in a part of the country where house prices were on the rise prior to the lockdown, don’t expect that to still be the case as we move into Level 3. The world has changed and there’s an enormous amount of caution at play as people try and work out how it all affects them. That situation will be further compounded by the fact that this is an election year, because history tells us that markets always cool in the six months prior to an election.
4. Don’t expect big drops in values
Hot markets are off the table but so are big price drops. With the exception of a few pockets around the country, most of the hype around any price drops will take the form of isolated headlines and these will be the exception rather than the rule. If you’re listing a property, take the advice of an experienced agent and start with the premise that any premium you might have expected to make, over and above market value, probably isn’t there anymore. If you’re buying, you shouldn’t expect a sudden cornucopia of bargains, but you can probably be more insistent on your top price.
5. Auctions or no auctions?
Auctions in Level 3 are still an option, with several real estate companies now offering them online. It will be interesting to see how this innovation develops. Vendors would do well to research other selling methods, which could be just as effective.
6. Conditional periods may need to be longer
Be aware that the period between provisionally agreeing to buy a property and moving to an unconditional agreement to buy – known as the "conditional" period – may need to be extended by a week or two for many buyers. This is because finalising your finance may take longer. The banks are currently overloaded with applications for support by existing customers and, by their own admission, haven’t been putting a lot of energy into new business. Be prepared for a longer wait for approval.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]
