Local Strength and Confidence
The stage 4 restrictions in Melbourne are creating a mini surge in our local marketplace. The feedback from buyers is that they see the current lockdowns as an opportunity to purchase property without the competition of Melbourne buyers. The market activity suggests that the stage 4 lockdown has completely restricted the amount of non-local buyers, but the surge in locally based buyers coming in to the market to take advantage of this absence is currently increasing the amount of competition in the market place. In short, it’s a great time to sell; local buyers are creating greater competition amongst themselves while trying to take advantage in the reduction of external competition.
It can be hard to highlight positivity in a time that many are experiencing uncertainty. The fact is that we can be positive, and we can be buoyed by the current state of the Geelong real estate market. Our market has been unknowingly readying itself for the sledgehammer that has been Covid 19. The growth in Government sector employment over the past 5 years; the expansion of our local medical expertise & infrastructure; plus, the growth in education and finance sectors has slowly but surely solidified the foundations of confidence and created long term job certainty. It has largely been those in these sectors that have driven the market and there is no doubt our micro-economy will be supported by these industries for at least another 12 months.
The identifiable factors creating opportunity and facilitating change include the current state of the residential rental market; the working from home phenomenon; first home buyer positivity; the impact of Covid on aged care; and the impending residential geographical spread.
The residential investment market has been a surprise packet in recent months. Properties becoming vacant are leasing extremely quickly at solid rates of return. The quick turnover is the result of the lack of new investments being purchased and becoming available to lease; first home buyers are extremely active in the current market and the properties they are purchasing are traditionally investment stock. A large number of investors are holding off purchasing in fear of future uncertainty, which is understandable; however, the opportunity is here now to secure good tenants at great yields.
Geelong’s workforce has multiplied in recent years due to the arrival of the TAC, Worksafe, NDIS, and the Bureau of Statistics; this combined with Barwon Health, City of Greater Geelong and Deakin University, we have a strong white-collar workforce. All industries that have moved to operate remotely (from home) including these above have created a surge in demand for property. The short-term novelty of working around the kitchen table has worn thin for many and as the reality of greater workplace flexibility looks likely, many are using this time to search for a property upgrade. This surge in demand is creating competition, and greater local purchaser activity.
First home buyers are currently extremely active and driving the market up to approx $600,000. They are researched, generally financially organised, and using this current time to take advantage of the grants currently being offered by the Government.
The heartbreaking situation in nursing homes will lead to many looking at alternatives. I suspect there will be a rise in demand for independent living with medical assistance, along with families choosing to care for elderly parents at home. The flow on from this may also see mature aged home owners staying at home longer, therefore fewer homes being available for sale; there will be a surge in demand for homes that have the capacity to house parent; or properties with more land where there may be the possibility of having a portable dwelling such as a granny flat. The opportunities that the market will be presented with include demand for larger homes; units & townhouses; this will also lead to a reduction in the supply of properties that would be traditionally sold to finance care accommodation, thus leading to a growth in value.
The increase in demand for the Bellarine, Surf coast and semi-rural properties is a direct result of people wanting to get out of the city. It is no secret that lifestyle beats convenience for many people, and this will see an increase in buyers looking to move down our way when restrictions ease.
We are surrounded by opportunity, and we are the current beneficiaries of recent infrastructure growth and we can have confidence that the uncertainty that we are faced with now, will have a silver lining in years to come.