Rethink Investing's "The Ground Report" (May 2020)

Sharing what we're seeing on the ground from our day-to-day dealings within the residential and commercial property markets.

– The last two weeks leading into May have seen a huge surge of investor enquiries at Rethink Investing, which is supported by our selling agent partners. In April, we purchased 21 properties worth a total of $14.6 million. We'd normally expect to purchase approximately $20 million in property during April, so we are roughly 25% down due to COVID-19.

– The low point in enquiries came during the last week of March and the first week of April. Since then we've seen a steady increase in confidence. Enquiry levels last week were as high as what we saw back in February.

– A number of our core group of leasing agents expressed they had an increase in demand from industrial style tenants looking for properties. Retail remains the weakest sector and office space is steady for now (comment related to Canberra, Brisbane and Adelaide only).

– Residential leasing is a mixed bag. The worst-hit markets are those where there's a lot of supply and the pain is concentrating on the higher value rentals. For example, Sydney’s Eastern suburb rents are down 10%, and the CBD is down 17%. Most of the more affordable freestanding housing suburbs are not showing declines yet. For example, the majority of the Adelaide and Brisbane rental markets are holding strong. FYI – we always focus on these more affordable markets.

– Low levels of stock. We are witnessing sellers who are reluctant to sell for lower prices, and with low-interest rates available, we haven't seen any distressed sales yet (average Australian property prices grew +0.2% in April, Source: CoreLogic)

– The residential markets which we operate in are still growing in value due to an acute lack of stock and a steady flow of investors buying. This ratio of buyers to sellers will protect these markets from price falls. Other markets will not be so lucky.

– The segments most affected by the current pandemic are hospitality, retail, tourist-related rentals and the premium and high rise residential rental markets.

– The segments performing the best are located in the industrial market, as the shift to online shopping becomes more apparent by the day. Many of our boutique medical and office commercial purchases are also performing strongly. The housing market remains the most resilient in areas where the vacancy rate is below 2% and where the average house price is below $400,000.

– It is clear that the last couple of weeks have been busier and the market had a spring in its step. As a result, we see the finish to the year as being much stronger just based on our day to day conversations with our clients.

If you would like to talk with one of our property experts about a specific market, please email [email protected], call 1300 965 551 or head to our website