By Ben Hennessy (HENNESSY REAL ESTATE)
The last 18 months has been quite the rollercoaster, with every high and low imaginable.
The pandemic has been crippling for many industries and areas, while others have thrived.
There is no doubt the real estate market both locally and across the nation is experiencing one of the strongest markets of the last decade.
‘Why is that?’ is the question I am often asked.
When markets go through strong surges there is usually never just one reason for it.
Sure there may be a tipping point, a catalyst that triggers the market growth, but when you dig deeper you see there are a number of contributing factors to any market boom.
So what have been the factors in our region?
The worst drought in 100 years
While mining is a significant pillar of our region’s economy, never has the economic importance of agriculture been more clearly demonstrated than in 2018-2019.
While it is slowly receding into the annals of time, the recent drought was one of, if not the worst, drought our countryside has seen in the last 100 years.
And everything suffered.
Our farmers bore the brunt of it.
But it flowed through into our retail sectors, into the mining sector, our real estate markets, into our very psyches.
I’m not sure about you but I much prefer the colour green than brown, but brown is all we had to look at – brown paddocks, brown lawns, brown landscape.
Yes there is still a rugged beauty in our drought-ravaged country but the unrelenting nature of that drought eventually wore down the most stoic of optimists.
This was reflected by two years of negative growth in the real estate market, the first for over a decade.
So when Huey finally turned the taps back on at the start of last year, our spirits soared and optimism started to creep back into our lives and the depressed economy.
It is timely to mention how resilient and courageous the farming families of our community are – to withstand such sustained hardship and to rebound as they have done, truly a remarkable trait and one for us all to be so proud and grateful for.
So the end of the drought set 2020 off on a very promising trajectory indeed.
Enter the protagonist of our story …
A world-wide pandemic
Do you recall the moment when you first heard the breaking news about the pandemic?
Etched into our memories forever will be 2020 for all it brought with it.
I remember struggling to comprehend the moment, so surreal did it feel, so uncertain the future looked.
That first lockdown stopped most of us in our tracks as we grappled with daily changing realities – lockdowns, social distancing and a myriad of foreign concepts that we had never had to deal with.
However, as we navigated our way through these uncharted waters, slowly a new sense of normalcy started to emerge.
Once again, we counted our blessings for living in the bush, away from the concentrated populations of the cities.
For many farmers ‘social isolation’ was part of the standard fare so little had changed for their reality.
Power supply as well as feeding and clothing the masses ensured the bulk of our workforce qualified under the ‘essential services’ label and so on the whole employment continued with a relative stability.
This breathed a sense of confidence and calm for our region that our city counterparts could only wish for.
Record-breaking interest rates
I’m not too young to remember when interest rates in the 1980s hit 20 per cent and beyond.
This was a crippling time for many as they struggled with impossible repayments and harsh economic realities.
This was the time when our family had to sell half the farm, lease the other half and for Dad to get a job in town as a stock and station agent.
In hindsight, this is probably what set me off on my path into real estate, a poignant point not lost on me.
More recent generations could not comprehend such a rate, when currently enjoying rates of sub two per cent for home loans.
And while this is not great for our retirees with cash in the bank, it is a significant contributor to the current real estate boom we are experiencing.
With the rental market forging ahead strongly, it is common now for buyers to do the maths comparing what they are paying in rent vs what they could be paying off in a mortgage and realise they would actually be saving money if they were to buy their own home rather than renting.
Couple with this the significant government incentives still on offer for first home buyers to enter the market and you have another contributing factor to the current strong market conditions we are experiencing.
Whether it be travel, dining out, weekend socialising, or jet-setting, there is no doubt the last 18 months has seen our ‘wings clipped’ in regard to our pursuits of pleasure.
Stay at home orders not withstanding, there has been a monumental change in our spending habits.
Not great news for the travel industry, but significantly better news for our long-ignored savings plan.
Almost like magic, we have found ourselves with surplus cash burning a hole in our pocket.
One of the better outlets for these ‘forced savings’ has been into a deposit for a home loan.
Another significant contributor to the current strength of the real estate market.
Home is where the heart is
The last missing piece of the picture sits closer to home and I believe has a deeper psychology behind it.
As mentioned, this pandemic has stripped away and denied us our usual preoccupations, be that going to the pub, overseas travel, holidays, or even at times simply leaving our homes.
Undeniably, this has left a psychological mark and I believe that impact is deeper than most of us have acknowledged.
As most salespeople would know, the enemy to sales is procrastination.
‘Is it the right house?’ ‘What if a better one comes up for sale later?’ ‘Is now the right time to buy?’ What if the market drops, should I wait?’ the list goes on.
All the questions, while perfectly understandable, are forms of procrastination.
When you are stuck in a rental property you have rapidly outgrown because you are now home-schooling four teenagers, procrastination takes a second place to necessity.
Changing from a small residential block to small acreage so the kids can run free riding motorbikes and living the good life during lockdown, now seems a pressing priority.
Realising that ‘home’ is actually the most importance physical space in our life, it truly does sit as the heart of our family existence.
This rediscovery of our love and need for the family home, somewhere to nurture our loved ones and feel safe during these turbulent times, has been the unexpected gift from the pandemic.
Whether it be for these reasons or for some other truth that has been discovered during these unprecedented times, the pandemic has changed the property market, and us, forever.
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