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Panicked property buyers are rushing to complete deals at any cost on upcoming auctions as a looming social lockdown spooked buyers, triggering a flurry of pre-auction transactions and off-market deals, akin to toilet paper hoarding.
In Melbourne, panicked buyers piled in and snapped up properties before auction in the fear they would miss out completely.
“Panic buying is happening. A bit like toilet paper it feels,” said Cate Bakos, buyer’s agent with Cate Bakos Property. “I had four auctions scheduled this Saturday and five next Saturday. Now I only have one on Saturday and one for next week.
“All have either been sold prior or have pending mid-week auctions. These pre-auction sales are being triggered by feisty buyers.”
All three properties she booked for next Saturday had received offers that were too good to refuse and were well above the pre-COVID-19 appraisals she had calculated, Ms Bakos said.
“So while I can see that some vendors are nervous or rattled, there appears to be enough aggressive and motivated buyers to patch the gap,” she said. “I think people who are particularly keen to buy a home are worried that if we have a social freeze, they will be chopped out of the market and then slammed when things improve.”
Buyer’s agent Lauren Goudy of Rose & Jones said she was seeing more vendors willing to negotiate, even in high demand inner Sydney areas.
“I have seen more emails about price reductions or adjustments this week than in a long time. I’m certainly using it to our advantage in negotiations for my clients,” she said.
Sydney-based property buyer Victor Kumar of Right Property Group said the major banks’ move to offer mortgage reprieve to eligible home owners would help calm both buyers and sellers who were growing jittery each day.
“I think it may take some fear out of the market for a lot of people especially those who have just bought their homes and worried about their job,” he said. “I know vendors were getting nervous and many were willing to take the hit just to close a deal quickly.
“I have a few Sydney agents texting me saying ‘just throw me an offer’. I think people are panicking.”
About 30 per cent of borrowers had less than one month’s payment worth of prepayments according to the RBA. It is this group that will be most vulnerable to a deterioration in the labour markets and economic conditions, said Tim Lawless, research director at CoreLogic.
“The move from the banks should help to ease what is likely to be a growing sense of anxiety from borrowers at risk of defaulting as economic conditions weaken,” Mr Lawless said.
NAB on Friday said it would freeze mortgage repayments for its home loan customers who are suffering financial difficulty for as long as six months.
Westpac followed suit and said customers who have lost their job or income because of COVID-19 will get a three-month mortgage repayment pause, with the possible extension of a further three months after review.
ANZ said it would provide buyers with an option to defer home loan repayments for six months. It also cut 15 basis point off its standard variable rate, the first bank to do so.
There is also help on the way as well for both commercial property and residential tenants with Prime Minister Scott Morrison announcing the states have agreed to working to identify how relief can be provided.
That work will be done to create so-called “model rules” that can be applied for hardship cases.
“All Australians are going to be making sacrifices, obviously, in the months ahead. And everyone does have that role to play stop and that will include landlords, at the end of the day, for people who are enduring real hardship,” Mr Morrison said on Friday.
While supermarkets have been going gangbusters, elsewhere in major shopping centres specialty tenants are teetering on the brink of collapse as social distancing rules set in and foot traffic dwindles.
“Our channel checks suggests mall traffic is down in some malls by over 50 per cent with many retailers seeking rent abatement,” Jefferies analysts wrote in a client note this week.
Source: Financial Review