MORE than 90% of vendors globally are still planning on selling their residential properties, but a disconnect in pricing expectations has emerged between owners and buyers as the residential market eases out of lockdown.
A sentiment survey carried out by Savills shows 78% of respondents stated that buyers were expecting to see lower prices than before lockdown, while 78% of vendors are anticipating pricing to remain the same.
Resort and second home locations such as the Algarve and the French Riviera report buyers and vendors expecting prices to hold firm, while respondents in urban markets such as Bangkok, Sydney and Prague report expectations of lower pricings on the buy and sell side.
An overwhelming majority of markets reported vendors are still planning to sell their properties, and 78% of respondents said that most or almost all of the buyers in the areas they cover are still looking for a new property.
Paul Craig, chief executive officer of Savills Australia and New Zealand expects buyer sentiment to strengthen as confidence returns to the market.
“The market is coming off an extremely low base of listings so whilst some say the higher stock levels coming to market will create great opportunities for bargains, I believe we’re just seeing a return to normal levels which should see us return to a balanced market,” he said.
SQM Research showed growing volumes of older stock growing volumes of older stock again pushed up the national total of listings by nearly 4% in May. During the month, house prices across the country fell for the first time since June last year, according to CoreLogic, although a small rebound in sales activity represented signs of resilience in the market – for now.
Chris Orr, director, residential at Savills said it is “easy to be negative right now as there are a lot of Australians doing it tough”.
“What many may forget though is while rental yields and capital values have dropped recently, so too have interest rates and incentives are now being offered to boost turnover.
“This has made it an even better time to buy in many cases than Pre-COVID for investors and people wanting to upsize or just get into the market.”
He said a key piece of information would be the Australian Bureau of Statistics’ lending indicators report on 9th July. The most recent lending data from the ABS showed new home loans slumped in April to the biggest monthly drop in five years, as buyers across the market halted their plans.
One third of respondents worldwide reported the same number of new buyers post-lockdown compared to this time last year, and 10% reported an uplift in activity, particularly in second home and resort locations.
Savills said the general sentiment across survey respondents is that things are looking positive, but the market hasn’t quite recovered yet. Respondents in China, the first country to emerge out of lockdown, stated that the market took two to three months to recover, and activity has largely returned to normal.
Many respondents reported that it was simply too early in the recovery to make any comparisons, because flights for international buyers are still not allowed, or because potential buyers are still waiting to view properties in person.
Changes to the way people have lived and worked during lockdown are already affecting buyer preferences. Respondents in 33% of markets reported increased interest from buyers looking to upsize their main residence, and urban locations such as Sydney, Rome, and Monaco reported increased interest in upsizing after residents endured lockdown periods in smaller spaces.
The overwhelming trend for second homes is that there has been little change in level of interest in 2020 from 2019. However, the number of buyers looking for investments could dip in 2020 as 30% of markets are reporting a decrease in buyers seeking investment properties compared to 12 months ago.
Respondents anticipate slightly increased stock levels, particularly in the near term as lockdown restrictions are eased are business activity increases. Resort markets in particular are reporting the potential for increased supply as international travel remains difficult and buyers prioritise upsizing their primary residence in the near term.
