Chapter 1: What impact did COVID have on property prices?
It's The Real Estate Podcast, brought to you by Ray White, the largest real estate and property group in Australasia. And welcome to another episode of The Real Estate Podcast. We're talking to Steve Waters from Wright Property Group. Welcome to The Real Estate Podcast, Steve. Yeah, thanks for having me. It's great to be here. Well, it's good to sort of be in a brand new year too, 2022.
Did you have a good break over the Christmas New Year?
It was. It was something that I've been looking forward to for 12 months, believe it or not, because the last couple of years just seemed like one long day. Yeah, for sure.
And we know that COVID has had a huge and in many cases a devastating effect on our lives, which is why we just needed that Christmas New Year break so much. And everything that we thought we knew was turned on its head and upside down when the pandemic struck Australia and the rest of the world. And we know that some of the larger problems associated with the changes we've had to endure, but
What are some of the more subtle changes do you think that COVID has produced, which potentially might be with us for a little while to come?
Yeah, that's a great question. Other than the economic pain, health, those obvious things, and then the ramifications of credit policy, first-time owners grants and all the government stimulus, some of those not so obvious changes are around the trends that are either going to be sustainable or not. And that might be the
the movement of populace away from areas to different areas as they wrestle with the employment slash affordability and lifestyle components that COVID has made fully aware to them that probably wasn't beforehand. So I think those trends that we're starting to see now, which is moving populations away from certain centres,
are really going to hold their own over the next, let's call it two to five years. But conversely, I also think there's been some short-term trends because of COVID that have had their time in the sun. And I would suggest that over the next few years may revert back to an element of normality. So it's certainly going to be interesting over the next couple of years.
You know, the moving population, I don't think anybody would have realised or dreamed of just how much movement across borders was going to happen in Australia. Do you think that's fair comment with regard to COVID?
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Chapter 2: What subtle changes has COVID introduced to the property market?
They're looking through those rose-tinted glasses. But do you see any losers as a result over perhaps the next couple of years?
Oh, this is really looking into the murky crystal ball. Short answer is yes, I believe there will be some losers. But in terms of what the parameters of how big a loser are they is yet to be seen.
An example might be that someone's just had 80% growth in a asset or a property over the last three years and they're going to give back 30%, which on the surface doesn't sound too attractive, but they've just still had over and above growth. annualized growth in that short period of time, even after they've given some back.
I think the real inflection point will be what have they done with that growth in terms of, well, have they released equity and then gone and purchased non-productive toys, boats, caravans, cars, trips, whatever it may be, and they've squandered perhaps what was a very rich and large time for them over a short period of time because of COVID and the ramifications of it.
But nonetheless, I think there'll be true winners for quite some time yet. A couple of reasons for that. I believe everybody today and this crisis versus, say, the GFC are far more educated today thanks to technology, thanks to the internet. Everybody's entrepreneurial to some degree as opposed to what they were 20 years ago.
So I think that form factor of education and smarts will hopefully hold people in good stead. for many decades to come. But unfortunately, there will be some losers over time, as there always is.
Yeah, and I suppose COVID, because people have been sort of locked up, cooped up for such a long time, I think there is just going to be that percentage of people, you use the word squandered, which is probably the right word to use. Yeah. You know, people are going to go out, buy those big toys. Yeah, I guess it's just that whole sort of lifestyle of living because we have been cooped up.
We have been refrained from doing anything. And as a result, there's just going to be some money wasted down the sinkhole.
Yeah, I actually refer to that as the revenge spend. People have been cooped up, as you say, and their household savings has exploded. The war chests that the government have helped build weren't necessarily necessary, if that makes sense. Plus, you overlay the cost of the savings. There's no travel. There's no fuel. There's no tolls. There's none of that. no eating out.
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Chapter 3: How has lifestyle influenced population movement post-COVID?
Do you get the bargain of a century? Sometimes it's a good deal, but in today's market, the question is as a seller, why would you want to go pre-market? Would you not want the whole world to know that you're for sale in such a hot market? So the trick for me is to
distinguish what is opportunity versus beat up numbers and maybe an overlay of ego because I could potentially be getting a pre-market opportunity. So it's always buyer beware, but all of it comes down to diligence, relationships, and just being the squeaky wheel. I mean, that's the only way to do it.
I know from our team, when we're on the hunt for properties for clients, we ring, we drop in, we physically see people, we send texts, emails, because we are in constant communication all the time, because we don't want to be forgotten about amongst the pool or the sea, the ocean of other buyers.
But once again, there's a big difference between pre-market and off-market, and I'd suggest that pre-market is really where it is, not off-market.
And what do you think in terms of privacy? So a vendor is extremely private about taking their property to market. Do you sort of have a, in terms of pre-market, do you have a sort of a percentage that may be in that category of the private type of seller?
A very small percentage because, yeah, money talks at the end of the day. And as a If you are a vendor or a seller, you're going to have to weigh up versus privacy versus potentially hundreds of thousands of dollars more. by going public, so to speak. But there are occasions where privacy is at the top of the list for whatever the reason. It might be divorce, estate settlement, whatever.
But I'd say to be a very small percentage in today's market. And as the market softens potentially over the coming years, you'll start to see that that percentage will become larger. And if I cast my mind back to the GFC, Well, there was a large percentage of pre-market there because there was a little hurt in the economy and especially around some asset classes.
And not everybody wanted the public to know that. So there was a lot of pre-market at that stage, but certainly not today.
Steve, great to chat. Thank you for illuminating a couple of those subjects for us. And no doubt we'll speak again. Thanks for coming on to the Real Estate Podcast.
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