Well, when I commented in my last newsletter that at the current pace of change I wouldn’t be surprised at any developments in real estate, I did not quite foresee the events of the past few days. Not only are open homes and private inspections temporarily outlawed, real estate transactions have entered a new phase as the country goes into lockdown for at least four weeks.
Taking and communicating offers by email is now the norm. And, yes, despite some buyers’ reluctance to become involved in any property transactions, they are still taking place. In the past few days, I and my colleagues at Nidd Realty have been negotiating several transactions. There are still buyers who need to buy and sellers who want to sell. Nevertheless, several buyers I’ve been expecting to offer on property have now withdrawn their interest. This is the kind of reaction that is not unexpected in such uncertain times. It is worth noting the distinction a recent well-informed commentator made, however, that we are in a health crisis, not a crisis brought about by a global financial crisis, as happened in 2008. The difference, though, could turn out to be moot.
We don’t know exactly how long the current lockdown will last. We are in it for at least the next four weeks but several well-informed people in the health, education and civil defence fields are preparing for much longer. Eight weeks to six months are timeframes I’ve heard. As I write, one-third of the world’s population is in lockdown.
In the immediate future, there have been many buyers and sellers with settlements due in the lockdown period wondering what will happen. The Real Estate Institute of New Zealand (REINZ) and the New Zealand Law Society are agreed that lawyers should arrange deferment of settlements that are impossible to complete because of Alert Level 4. Settlements of rental property, though, could still take place as the change of ownership can be arranged without people having to move.
As the world of real estate attempts to continue it is becoming clear that the virus crisis is affecting prices. Sale prices of even a couple of weeks ago might not be attainable for quite a while. Not only are buyers fewer in number but those remaining and willing to offer are likely feeling less wealthy than they were at the start of March. First home buyers relying on Kiwisaver will be among those hit by sharemarket falls. They, like everyone with market investments, will be poorer if they cash in now. That is likely to affect the first home market as much as higher priced properties. Just where it will end is hard to say. In the meantime, there will be buyers looking to take advantage of a halt in what has been for four and half years a buoyant Dunedin market.