Last week, CoreLogic reported that home buyers are returning to the market at levels that outweigh new listings. The balance of supply and demand has tipped in favour of sellers as the number of listings fell, despite new listings increasing by 22.4 percent over the four weeks to 31 May. This means that sellers have returned to the market, but demand from buyers ate up all the extra listings. Property listing platforms saw a significant increase in web traffic as Australia passed the worst of coronavirus, with data from SimilarWeb showing an increase between April and May of 22.3 percent for realestate.com.au and 17.1 percent for domain.com.au.
This positive news for the property market comes alongside ongoing positive consumer confidence from ANZ-Roy Morgan. After consumer confidence took a COVID-induced hit in March, the index has recovered almost entirely over April and May. Interestingly, consumer confidence did not impact every sector during the COVID-19 downturn, with the Commonwealth Bank Household Spending Intentions Series indicating that spending on both alcohol and fitness equipment surged at various stages during the lockdown.
Australia’s health and economic recovery from COVID-19 are both continuing to look good. The recovery’s future will depend on continuing to contain the virus domestically, as well as within the borders of our major trading partners such as China and the United States. With the latter contravening social distancing through various political movements over recent weeks, we may be focusing more on Chinese trade in the coming months.
Buyers entering the market at this time will find themselves in a lending environment never before seen in Australia. Earlier this month, Westpac announced a 2.69 percent variable mortgage rate for customers with a loan-to-value ratio of 70 percent or less. Mortgage aggregators have also commented on the high level of competition among lenders. This has led some to speculate that smaller lending groups will offer rates below 2 percent in order to offer a point of difference against the big four.
In a scenario where renters are returning to work en masse and the economy experiences a healthy post-COVID recovery, a growing number of property investors could find themselves enjoying both positive cash flow and capital growth at the same time.