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COVID 19 and the Real Estate Market

In an effort to jumpstart the economy, the federal government is getting ready to loosen some of the limits placed on COVID-19 lockdowns. Real estate sectors are getting ready to resume normal operations.

The Northern Territory and New South Wales were the first to abolish limitations on open inspections and on-site auctions, and real estate professionals are wasting no time taking advantage of the newfound freedom. Beginning this weekend, various locations across the state will be hosting open houses as well as auctions.

The number and severity of limitations are gradually being loosened across the country in various regions. Inspections with up to six persons, including the real estate agent, are now allowed in the state of Queensland; however, in-room auctions and open houses for the general public are still prohibited in that state.

In Western Australia, the restrictions on open for inspections have been loosened, and now up to ten individuals are permitted to attend open homes and display village inspections. This is subject to the condition that proper record-keeping and sanitary procedures are in place.

Stamp Duty

In the process of determining how best to mitigate the adverse effects of COVID-19 on the Australian economy, the nation's policymakers are weighing the pros and drawbacks of eliminating one of the most reviled taxes in the country.

Stamp duty is an additional cost associated with the purchase of a home that many people in Australia are reluctant to pay, particularly those living in increasingly expensive capital city markets. However, because state and federal authorities are leaving no stone unturned in their quest to assist Australia's economy in the wake of the Coronavirus, it is now possible that the tax will finally be up for review.

Leaders from all around the country are participating in the discussion that is taking place about whether or not the unpopular charge is an effective revenue source for propping up the economy in the wake of COVID-19.

The rates of stamp duty charged to home buyers in Victoria and New South Wales are among the highest in Australia. Stamp duty rates vary widely from state to state. Therefore, if the latter state, which relies largely on this money stream, decides to modify its policy, it could lead to other states following suit. This is because the latter state relies substantially on this revenue stream.

For purchasers, the elimination of stamp duty would mean that they would soon be able to find their next purchase to be a significant amount more inexpensive.

However, this does not mean that they will not be responsible for the costs, as it appears that some type of yearly land tax will be the most likely replacement for stamp duty.

Auctions

As part of the first step of the Federal Government's proposal to lift coronavirus restrictions, on-site auctions and open houses will be allowed once again. This is a move that the industry thinks would boost customer confidence and activity.

The National Cabinet's three-step strategy to restore Australia's economy, which was presented by Prime Minister Scott Morrison on Friday, highlighted the importance of the real estate sector as a priority. As a result, public auctions and inspections can now continue, but only under certain conditions.

Beginning the following week, the first phase of the plan would permit meetings of up to 10 individuals, with subsequent phases allowing up to 20 and eventually 100 persons respectively. Before giving the go-ahead for the following phase, the progress will be evaluated once every three weeks.

All of the states and territories came to an agreement on the road map, but it is up to them to determine when they will implement the modifications.

Prices of Real Estate After the Global Financial Crisis

The broad spread of the coronavirus has had a significant impact on the market for residential real estate. As a direct consequence of this, the level of consumer confidence is at an all-time low, and both buyers and sellers are worried about their jobs.

The rise that was witnessed in the decade following the Global Financial Crisis is an indication that consumers should adopt a longer perspective while thinking about the property, as is agreed upon by the industry professionals. As a result of the lack of clarity regarding the duration and severity of this downward trend, they recommend that individuals adopt a more long-term perspective.

Because of the tendency of prices to go up, it is always to one's advantage to hold long-term and sort of ride through the cycles rather than trying to choose the bottom and peak of a cycle, which is a very tough thing to do. Prices in cities like Melbourne and Sydney are going down as a result of a variety of factors. In spite of this, it is always to one's advantage to hang onto something for the long term because prices do tend to go up.

Price cuts of up to ten percent or more are widely anticipated to take effect within the next few months, and this expectation is shared by the majority of people.

Is Now the Right Time to Buy?

It is understandable that many potential homeowners are not moving forward with their home purchases as Australia and the rest of the world continue to struggle with the coronavirus epidemic. This is especially true for those potential buyers whose employment status is uncertain.

However, now could be a good time to enter the market for those people who have a greater sense of stability in their jobs and their financial futures.

When a real estate market is near the bottom of a cycle, it seems like a good time to make a purchase, in my opinion. In this market, there is undoubtedly less competition for properties, particularly in those states that have closed their borders. This is especially true in the case of states that have legalized marijuana.

Will There Be a Recovery in the Market?

After the coronavirus lockdown rules are lifted and sellers hurry back to the market, prospective purchasers of homes should anticipate being provided with a wide variety of choices.

After the pandemic was declared and strict rules were implemented, several sellers pulled their houses from the market or delayed putting their properties on the market.

However, after the National Cabinet issued a road plan to soften restrictions, vendors are getting ready to market their products once more.

blurred house in foreground with coins in background

Foreign Investment During Covid-19 Property Downturn

In the wake of COVID-19, the primary house construction group in Victoria has issued a call to action to the government of the state, pushing them to entice cash-rich overseas investors to swoop on Melbourne in an attempt to capitalise on the city's booming housing market.

The Master Builders Association of Victoria has urged the government to immediately suspend the immediate eight percent additional stamp duty taxes that are paid by foreign investors for at least six months in order to offer immediate stimulation to the economy. The suspension of these taxes would last for at least six months and would take effect immediately.

The research conducted by the Financial Intelligence Research Board (FIRB) in 2018-19 found that despite a decrease in permitted investment from its all-time high of $28 billion in 2015-16, Victoria remained Australia's most prefered state among all offshore residential property buyers. This was the case despite the fact that in 2015-16 permitted investment reached its all-time high.

The total value of the 3,163 applications that were granted to buy new and existing homes, vacant land, and properties for development in the state was $3.9 billion. These applications accounted for 42 percent of the 7513 purchases that were approved to be made across the country and had a combined value of $14.8 billion.

Following New South Wales in terms of the number of approvals received, Queensland came in second with 1343 worth $1.3 billion, followed by New South Wales with 1337 worth $3.1 billion.

Every enquiry made by a foreign investor offers the possibility of generating activity not only for the construction industry but also for the many other businesses that our sector helps sustain.

At a time when drawing investment into the economy of our state is as crucial as it is right now, this is an opportunity that should not be wasted.

Since Australia, and particularly Victoria, are in a good position to recover strongly from the virus and the necessary measures to combat it, cash-rich buyers from other countries were likely to look for deals in this country. Victoria is particularly well-positioned to recover strongly from the virus.

This is not a crisis in the sense that there is a lack of access to finances; rather, it is a crisis in the sense that there is an inadequate amount of output in the economy.

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