- The real estate industry struggled to adapt during the 2020 lockdown, with deals and auctions disrupted.
- Economists initially predicted a housing market downturn, but the opposite occurred.
- Online auctions and digital solutions became essential, with companies quickly adapting to new technologies.
As teddy bears started to appear in windows and the team of five million crossed roads to avoid each other when out for walks, the real estate industry was fighting to stay open for business – even in lockdown.
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The year 2020 had dawned on a calm housing market but one which was on the up after a flattish three years.
Rumblings of a strange illness were emerging out of Wuhan, China, however, and over the next few months the Covid-19 virus rapidly spread across the globe and the death toll rose.
By late February, the virus was found in New Zealand, and on March 11 the World Health Organisation declared an official pandemic.
On March 19, New Zealand closed its borders and a couple of days later the Government introduced the four-tier alert level system.
By March 23 the country was at level 3 (the virus is uncontained), moving swiftly to level four at midnight on March 25 and New Zealand entered its first lockdown.
Agents were restricted to their homes, leaving a wake of half-done deals, cancelled open homes and auctions, and panicked buyers and sellers.
Confusion reigned, at least initially, though some were more prepared than others.
Independent economist and housing market commentator Tony Alexander says he already had a stash of pasta, rice and chocolate on hand, enough to feed his own family and others if needed.
Independent economist Tony Alexander: "Out of the lockdown I built a business.” Photo / Fiona Goodall
The OneRoof columnist says other crises – 9/11 in 2001 and the Global Financial Crisis in 2008 – were the catalyst for him prepping ahead rather than any “bunker mentality”.
After the earlier events, people feared another Great Depression, or a disease like smallpox being deliberately released, and of house prices tanking.
When Covid came along, Alexander says he moved into not survival mode, but “handle mode”.
“Handle it and don’t panic and see if you can help other people. The only way I could really help other people, given we were all separated from each other, was with what I could write and then the massive number of webinars, of course, that took off from that time of the first lockdown.”
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People were hungry for information and Alexander wanted to reassure the pandemic was not the end of the world, that the economy still had good fundamentals and that strong responses could be expected from the Reserve Bank and the Government.
The 2000 people he had signed up to his free weekly Tony’s View publication snowballed to 10,000 by the end: “Basically, I built my business on the initial boom of subscriber numbers over that seven weeks, so for me, out of the lockdown I built a business.”
ASB chief economist Nick Tuffley remembers the surreal feeling of being told to stay at home and work from there.
The first thing people wanted to know was “what’s the likely outlook for the economy when you basically close about a third of it down?”.
Masks and social distancing became a regular feature of the real estate landscape in the months after the country emerged from the hard lockdown in 2020. Photo / Peter Meecham
His team started working through various scenarios in an uncertain world, some more upbeat than others.
He recalls the spirit of everyone being in it together: “That team of five million was certainly alive in that first lockdown. When I reflect back on the work we did, a lot of the focus was ‘this could be quite bad’.”
While economists generally thought house prices would fall, hindsight showed the opposite happened: “On the plus side, we were less wrong than [other] people.”
Tuffley credits the then Labour Government’s wage subsidies as being a key component of the economy performing better than expected.
But he says economists everywhere did not anticipate the psychological impact on the public would be the opposite of what they expected.
One of the big concerns during the lockdown was that people would be cautious about job security and rein in spending, but people went the other way, with a prevailing view being “you only live once”.
Ahead of the lockdown, the Reserve Bank had reduced the Official Cash Rate from 1% to 0.25%, indicating it would stay there for at least 12 months, and Tuffley says the power of low interest rates was soon clear to see.
On March 16, 2020, Reserve Bank Governor Adrian Orr slashed the OCR to a record low 0.25% to support the economy against the impact of the Covid-19 pandemic. Photo / Getty Images
“I think the one thing we proved is if you lock everyone up inside the country and you don’t get outbound migration you can still have a whopper of a housing boom.”
In the background, REINZ was working with the Government to sort out the rules for the real estate industry.
The former chief executive of the institute, Bindi Norwell, is now CEO of ProCare and did not speak for this story.
But she told OneRoof in 2020 that as Covid was building into a crisis, she was writing to ministers with suggestions and offers of how REINZ could help.
“I was on the phone constantly – all hours of the day and night – not only trying to manage REINZ but also help the industry with what they could and couldn’t do.
“Level 4 was pretty straightforward – you couldn’t do much – but we needed that clarity from Government.
“There were a lot of discussions with WorkSafe and we had to go through a lot of sign-offs with the National Crisis Centre.
House sales and house prices spiked in the months after lockdown. Photo / Getty Images
“It was the most intense period I think I’ve been through in my working career.”
The day before the lockdown, Ray White Manukau had held auctions and director Tom Rawson recalls shouting the usual post-auction burgers and the team watching the breaking news about the imminent lockdown.
People finished their diet cokes and some went for a beer, thinking they wouldn’t be seeing each other for a while.
Daily online team meetings began the first morning as management tried to sort through a “complete shambles of information, what you could do, what you couldn’t do”.
Corporate offices of the big real estate companies took the lead, and Rawson remembers Ray White head office providing what information they could, and there were big issues to find a way through.
For example, of several hundred listings at Ray White Manukau, some had offers conditional on building inspections which could no longer go ahead.
“We just sold a bunch of properties that evening at auction and so we were collecting deposits and people were putting up sold stickers, and all that kind of stuff, so that needed to be slowed down.”
Vendors were scared deals were going to fall through and with real estate deals often forming a chain, one moving part affected another.
“We had properties launching that day, and properties exiting the market that day, and everything in between. The amount of uncertainty was huge.”
At home, Rawson had a two-year-old child and a pregnant wife who was due to give birth in June.
He remembers taking the toddler in the pram for morning walks, glued to the phone: “I spent my mornings walking the streets for several hours calling through our staff and doing welfare checks.”
Ray White auctioneer Sam Steele remembers practising how to conduct an online auction during the first lockdown. Now auctions are live-streamed as a matter of course. Photo / Fiona Goodall
There were layers of weirdness, from the fears around how Covid spread to everyone washing their groceries.
“I remember going for a walk with one of my mates and we were on each side of the road.
“Our neighbour flew home from Ireland and she had to isolate in her caravan away from the rest of her family, so she was on the front lawn and they were doing parcel drops to her.”
Early on, Rawson was figuring his way through the “massive” tech upskilling required to keep things moving, such as the mass adoption of digital signing of sale and purchase agreements, and dealing with people at different levels of ability.
“We’ve got 18-year-olds through to almost 80-year-olds in our business at varying levels of tech. I remember one of our older people just couldn’t get online, they didn’t have a computer at home.”
Because everyone was in the same lockdown boat, buyers and sellers were receptive to ideas and solutions, such as, “You could all stay put for a little bit longer and no one charges penalty fees to anyone, how does that work for people?”
Harcourts agent Diego Traglia: “We got out on the other side and actually found out the tide wasn't going out, it was coming in.” Photo / Fiona Goodall
Emails from the time show by the first week of April, deals were being made and the merits of Google versus Zoom were being discussed.
One email was discussing subsidies and how to redeploy front of house staff, and another was looking at legal clauses and trying to create some flexibility around unknown circumstances.
One read: “The agreement is conditional on the purchaser being satisfied with a physical viewing of the property on or before five working days after the government reduces the Covid-19 level to one that will allow physical inspection of the property.
“I remember getting up earlier and earlier throughout that lockdown,” says Rawson.
Vaughan Borcovsky, operations manager for Barfoot & Thompson, was at his sister’s 25th wedding anniversary in Christchurch and recalls having to get back to Auckland.
“No one knew whether we should stand close and talk to each other and all the other bits that go with it, but we quickly came together as a leadership team, meeting on a daily basis to talk through how to help the team.”
Top of mind was how to run online auctions. Borcovsky says they looked at how auction streaming was done in Australia.
“We did that over a weekend and made the decision on a Monday morning to go with a product called Auctions Live, and we’ve been with them ever since.
“The software allows us not only to stream the auction and for people to see where the bidding is but also to place their bids through the app – at that stage we were the only company doing that in Australia or New Zealand, to our knowledge.”
Having everyone in different places – the auctioneer at home, the agents at home, bidders and vendors at home, plus all the admin staff at their homes – took training and Borcovsky remembers working day and night.
“When crisis happens you already think you are surrounded by great people but you really see how people are in those times. It was trying times but the caliber of the team that we were surrounded by was fantastic.”
Ray White’s head auctioneer Sam Steele was with Bayleys during the first lockdown, and remembers the auctioneers practicing how to conduct online auctions.
“Can you hear it, do we need to be faster, do we need to be slower, if we have to pause to negotiate, what does that look like?”
He recalls it being “absolute panic stations” when the lockdown was announced, saying the real estate industry had never been in a situation where they could not physically get into properties, or even into their offices.
“There was no manual on how to prepare for that. Everyone, I think, regardless of what industry you were in was kind of preparing for the worst and not knowing what to expect, and that was probably the complication.”
Others in the industry handled the lockdown in different ways. David Ding, from Harcourts Cooper & Co, remembers the market had become busy so he was looking forward to the “quick break” the lockdown would bring, never expecting it to go on for seven weeks.
But he says his mindset is always adjusting: “No matter what happens, we’re just like a tiny boat in an ocean.”
Across town at Harcourts North-West, Diego Traglia told his team the harder they worked the better it would be on the other side, because at the time people thought no one would be buying.
Instead, the market was on steroids: “We got out on the other side and actually found out the tide wasn’t going out, it was coming in.”
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