Australia's response to the COVID-19 outbreak was able to secure and maintain local demand for property, according to the latest analysis by McGrath Estate Agents.
John McGrath, founder of McGrath Estate Agents, said Australia was able to manage the outbreak "exceptionally well," allowing it to ease restrictions sooner than expected.
"Australia now has a roadmap out of COVID-19, with social restrictions eased last week in stage one of a three-stage process and the re-commencement of opens and on-site auctions across the country," he said in a think piece in The Real Estate Conversation.
McGrath said the latest auction data show an "immediate and impressive bounce-back" in local buyer demand.
Also read: Has property proven its resiliency?
Recent figures from CoreLogic show that despite the muted auction activity, successful sales rates have gone back to above 50% levels. Over the weekend, 400 homes were scheduled for auction, returning a preliminary clearance rate of 64%.
"Sydney had an auction clearance rate of 70% that day — the highest result since mid-March before opens and on-site auctions were banned," McGrath said. "Data shows fewer properties are being withdrawn and more are selling at auction, indicating owners are feeling more confident about proceeding to auction instead of selling prior."
Auction activity is expected to improve over the next few weeks as restrictions continue to moderate.
In terms of property prices, McGrath said they managed to hold up amid the outbreak.
A separate report from CoreLogic shows that home prices remained on an uptrend in April. However, the rate at which they are growing appears to have already slowed down.
While the strong demand from local buyers will help boost confidence in the property market, McGrath said there is still a need for Australia to regain its appeal to foreign investors.
According to the Foreign Investment Review Board (FRIB) report for FY2019, international investments last year totalled $14.8bn, significantly lower than the $72.4bn investments recorded in 2016.
"This is partly due to tighter capital controls in China, resulting in much less outbound investment since 2016. China was our biggest real estate investor for several years, but today, the US is number one, followed by Canada, Singapore, Hong Kong, and then China," McGrath said.
The FIRB report cited the increase in state taxes and foreign stamp duty as main factors behind the decline in investments.
McGrath said governments should consider reviewing these taxes to encourage foreign buyers to invest in Australia.
"Australia was proven to be a safe harbour for investment during the GFC and now, once again, we are a stand-out success story in our political and economic management of another global event," he said. "We need to get rid of these taxes and once again put out the welcome mat for foreign investment," he said.
