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The real estate industry could see some increased pricing pressures as the COVID-19 crisis unfolds, particularly if higher numbers of Australians are forced to sell their home due to financial impacts.
Speaking to Real Estate Business, Next Address managing director Julie O’Donohue said there could be some downward pressure on real estate commissions over the next 12 months depending on the economic impact of COVID-19.
“As people come through the COVID-19 crisis, we’re going to see a lot of pressure on real estate agencies,” Ms O’Donohue said.
“There’s going to be a lot of vulnerable people in the next six to 18 months that may need to sell their house. If you don’t have those huge transactional costs and you can walk out of the sale with more money in your back pocket, that’s going to be a huge advantage to vendors in a difficult position as we enter the next phase of COVID.”
In areas such as Sydney where the average property prices are higher, Ms O’Donohue said it can cost vendors as much as $50,000 in commission to sell their house.
“If you’ve got a house that’s worth $900,000 and you’ve got to pay even $25,000 commission, that’s a lot of money. That could be the difference between you making a small profit and not making a profit on a house,” she said.
Greater adoption of technology in the real estate sector, she said, was also helping to make the sector more efficient and reducing the amount of time wasted by agents.
Virtual tours, for example, have meant that by the time buyers have decided to view a property in person, they are more engaged with that process and further along the buying process as they’ve already explored that property virtually.
“With technology streamlining processes, this will also lead to a reduction in transactional costs,” she said.
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