COVID-19 sees buyer demand shift to outer 'burbs

author-avatar By on September 17, 2020
COVID-19 sees buyer demand shift to outer 'burbs

Photo by Ingo Joseph from Pexels

COVID-19 lockdowns and the shift to working from home has seen buyers ditching the inner city for the outer suburbs, new research reveals.

House hunters in major capital cities across Australia are increasingly looking for homes in outer suburban areas according to a new report from Domain.

Domain's Buyer Demand Indicator, which tracks buyer demand for houses and apartments across Australia, shows that houses and apartments in the outer suburbs of Sydney, Melbourne, Brisbane and Perth were in the highest demand in those cities for the month up to September 6.

Domain Senior Research Analyst Dr Nicola Powell said the COVID-19 crisis has made buyers rethink where they want to live.

"The current health crisis has changed the way we use our homes, and for some altered our purchasing decisions and property wish lists,” Dr Powell said. 

“And while COVID-19 lockdowns sent buyer demand into a state of hiatus, activity from people likely to buy has rebounded in all capital cities apart from Melbourne.” 

Buying an investment property or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for investors.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
REFINANCE IN MINUTES, NOT WEEKS

Nano Home Loans Variable Owner Occupied, Principal and Interest (Refinance Only)

  • Refinance only. Fast online application
  • No Nano fees. Free 100% offset sub account
  • Mobile app, Visa debit card & instant payments
VariableMore details
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
YOU COULD WIN $100k TO PAY DOWN YOUR LOAN*

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^

Rates correct as of October 28, 2021. View disclaimer.

Domain's Buyer Demand Indicator focuses on behavioural searches to identify those who are more likely to purchase a home. 

Those “likely to buy” are classified by the actions they take on the Domain site, like shortlisting a home, sending an enquiry, completing a property inspection and frequently viewing photos and the property listing. 

Sydney

The report found interest in Sydney real estate has remained strong despite property prices starting to fall and the nation entering its first recession in 29 years.

Over the four weeks to September 6, buyer demand for houses increased 9.5%, marking the steepest four-week increase since the post-lockdown double-digit rebound in May.

For units, buyer demand was a little more subdued with the indicator rising 4.5% over the four weeks to September 6.

Houses remain the most in-demand property type by far, with 89% more "likely to buy" actions than units.

"While both property types have seen a significant uplift in buy intent behaviour from property hunters, with the indicator reaching new heights, the pace of growth for houses has been greater relative to units," Dr Powell said.

"While a tree change or sea change from higher-density living has always been appealing, the need to commute into the city has been a strong enough deterrent for many."

The report found that the areas in highest demand are leafy, outer-suburban locations with bigger block sizes, bigger homes and better affordability.

"Rouse Hill-McGraths Hill and Bringelly-Green Valley are prime development areas, providing the opportunity to build or purchase new, perhaps reflecting first-home buyer demand from those seeking to take up current government incentives," Dr Powell said.

Melbourne

Buyer demand was weaker in Melbourne, with demand for houses dropping 13.8% and 19.7% for units.

Dr Powell said this was likely due to strict COVID lockdowns discouraging buyers from being able to go out and inspect properties.

"Demand continues to weaken in Melbourne as the strict stage-four lockdown dampens buyer activity," she said.

"The indicator has reached the lowest point since January for houses and units.

"This emphasises the impact Melbourne’s lockdown has had on real estate given January is seasonally a weak period for transactional activity, as the holiday season distracts buyers and sellers."

However, houses still remain the most in-demand property type with 135% more "likely to buy" actions than units.

The Mornington Peninsula was a top area for people likely to buy both houses and units, with the area recording some of the steepest annual increases in activity.

"Once lives return to near-normal, the commute to the office will play a less crucial role in deciding the location we reside. This may be one of the reasons for a shift in demand to Mornington Peninsula, while others could be considering a holiday home purchase as overseas travel will be unlikely for the foreseeable future and remain undesirable for some."

Brisbane

Demand from people likely to buy is on the rise, up 2.3% for houses and 4.1% for units in the week to September 6, marking the second week in a row activity has strengthened.

Over the four weeks to September 6, buyer demand for houses in Greater Brisbane increased 1.4% but fell 9.6% for units.

Lifestyle areas like the Gold and Sunshine Coasts remained popular among prospective home buyers.

"Some of these lifestyle regions are likely to benefit post-pandemic, with current search behaviours reflecting the increased desirability for being further from the city," Dr Powell said.

"This could be encouraged by businesses adopting the more permanent nature of working from home arrangements.

"Prospective home buyers are drawn by the lifestyle, affordability, infrastructure and opportunity to purchase a vacant block or knockdown-rebuild."


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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