John McGrath Has COVID Changed Real Estate Forever And Suburb Picks For 2021
In Melbourne’s newly-freed property market, new listings have surged and the first couple of weekends of on-site auctions have delivered encouraging clearance rates.
I think there will be quite an active period of buying and selling in Melbourne right through to Christmas and probably early next year.
It’s certainly saying something about pent-up demand when more auctions than ever before (505 auctions) take place on Grand Final Weekend - two days traditionally reserved by Melburnians for nothing else but watching the AFL and NRL deciders.
It’s amazing to reflect on the impact of COVID-19, which has affected our lives so deeply and in so many ways in such a short amount of time.
The pandemic has changed the way many people work and live. Some of these changes will be temporary, some will be permanent and the ramifications for property are enormous.
We explore this in our newly released McGrath Report 2021, which focuses on a single topic for the first time in its history by posing the question: ‘Has COVID-19 changed real estate forever?’
The answer is of course, yes and of course, no. There’s zero doubt that the pandemic will cause sectors of the population to adjust their way of thinking and behaviour forever. This virus has prompted many to reassess their lives and make new choices for the future.
One of biggest trends is the exodus of city workers, who can now work from home on a permanent basis, to Australia’s many beautiful regions, where homes are cheaper and the lifestyle is better (beautiful natural scenery, less traffic, more beaches…you get the picture).
Put simply, many people will never return to a full-time centralised work environment again. At least, not five days a week. They’ll cease their daily commute and jump on the cyber highway (after a morning swim at the beach) instead.
From a lifestyle perspective, this creates a host of benefits and new opportunities. Why live above your financial means in a crowded urban environment if you can work remotely and meet online from the Mornington Peninsula, Central Coast or Sunshine Coast?
Our company has already seen a huge jump in enquiries and transactions in almost all of our lifestyle locations from families seeking to leave the cities as well as Baby Boomers and Empty Nesters who have brought their seachange or treechange forward in earnest.
The new world order will also have an impact on the design and finishes inside homes.
The old-fashioned granny flat will become an object of desire, ideal as a work studio or separate accommodation for multigenerational families.
The demand for home gyms will increase, as will yoga; and maybe even Zoom rooms! Naturally, fast internet speed will become a more important asset than ever before.
Finally, what about prices? Surely a global pandemic is cause for a material re-adjustment in home values and the highly publicised “major correction to Australian prices” that the doomsayers have been erroneously predicting for 40 years?
Well, my prediction is in the opposite direction.
I think there’s every chance that a small, short term correction might land for six to 12 months, something in the order of 5%. But the most in-demand markets that offer people what they want are about to take off again.
With interest rates approaching zero and many owners having deleveraged in the past few years, I envisage increases in well-located prime residential real estate in major cities and regional lifestyle areas, that is, anywhere near surf, waterways or lots of trees within 90 minutes of the big East Coast cities.
Our new Report also includes my top suburb picks for these cities and their surrounding areas. To check them out, download the McGrath Report 2021.
The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters.
This article originally appeared in The Real Estate Conversation (November 02, 2020)
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