While the Orange real estate market is likely to see the most dramatic slowdown in recorded history, we are in an incredibly strong position for a possible quick and full recovery.
The Sydney market has ground to a halt over the last 14 days. Last weekend many owners decided to cancel or postpone their auctions, with a small number of owners deciding to auction their properties online. The clearance rates in Sydney was 41.2%.
This month Orange will most likely see the lowest number of residential sales in more than 50 years.
April is historically a slow sales month. The market has always been hugely impacted by Easter, ANZAC Day, the start of school holidays and the start of Orange’s cold weather. Add Covid-19, financial uncertainty and social distancing, and it’s not hard to guess how April will turn out.
I believe the most significant force on the market will be uncertainty. Most of us just don’t have the ‘uncertainty tolerance’ needed to be unaffected by what is happening.
The current health situation won’t be over within the next 8 weeks, but our level of uncertainty just might be. And when certainty does eventually return (in whatever weird form it might take) we are going to be left with not only the lowest interest rates in history, but also a key driver for a strong real estate market – increasing rents.
There are currently low numbers of available rentals in Orange (106 on realestate.com.au and that is really low in comparison to any time last year). Even with last week’s stricter social distancing guidelines, we were able to lease 10 properties in 5 days. People still need somewhere to live and currently there just aren’t enough homes in Orange to meet the demand.
Within the next three months the Newcrest expansion will start to bring more renters to our under-supplied market.
An under-supply of available properties pushes rents up and increasing yields attract investors. Uncertainty in the share market, low interest rates and increasing rental values in Orange, could see a tidal wave of investors enter the market.
First home buyers we have spoken to haven’t dismissed the idea of buying, they have just ‘parked’ the idea until later in the year.
Later this year, a home that is worth $400,000 could cost $420 to $440 per week to rent. Loan repayments to buy a home worth $400,000 (if you have a 10% deposit*) could be under $350 per week.
Many buyers may believe now is the time that they will get a bargain. With our strong rental market and low interest rates, I disagree.
*Fixed rate of 2.79% p.a. for 5 years, over 30 years