COVID-19 has introduced an increased level of business risk for most Australian organizations. Industries like tourism, hospitality and retail are regularly making the news but the impacts of COVID-19 are being felt across almost all areas of Australian business including off the plan developers.
In the last twelve months the environment surrounding off the plan property was challenging in a number of respects, with overseas buyers having increased difficulty settling their properties, valuations becoming more conservative and purchasers as a whole becoming more discerning.
Now with the advent of COVID-19 we are seeing the industry facing four emerging issues:
- Declining purchaser sentiment
- Restrictions in lending
- Valuation trends
- The impact of government directives
Declining purchaser sentiment
It’s a stressful time for everyone at the moment and purchasers are no exception. With Coronavirus dominating the news and extensive commentary on the economic outlook it is understandable that people are feeling anxious about the world right now. We are experiencing a lot more communication and engagement from purchasers with the current climate prompting many purchasers to connect with us and express their concerns for the future. As a result we are finding managing purchasers is taking more time and empathy.
As a team of experienced settlement consultants dealing with purchaser anxiety is what we do best. We can help you by being there for your purchasers to answer an avalanche of questions and guide them through the process, saving you time and minimising settlement risk. The KIN process gives you transparency and control without the stress of managing purchasers through settlement.
Restrictions in lending
Finance is getting more difficult but it’s not impossible. Banks are trying to balance maintaining their loan books with the obvious impacts to credit risk. Each bank seems to be doing their own thing, making it hard to predict which purchasers will and won’t be impacted however we’re seeing that the major banks are continuing to lend to new clients and are currently prioritising purchases. The banks are obviously looking keenly at any purchasers from within the industries most impacted by Coronavirus, like tourism, hospitality, entertainment and retail however if they have evidence they are still receiving an income this is looked upon favourably.
So now more than ever it’s important to be across each and every one of your purchasers and their finance situations and ensure they lodge their finance applications promptly as there are currently delays in applications being assessed. We can help through our panel of trusted financiers who cover a broad range of finance options for purchasers.
The valuation process has always been critical to property settlements. Arguably, valuations have never been more important than now. Whilst the good news is right now we’re not noticing any changes to valuation results as a result of Coronavirus, over the coming months we anticipate valuers may need to become more conservative. This is based on feedback from valuers who have told us they have a concern for quality comparable sales in the coming months which may lead to them needing to be more conservative in their approach. Valuation firms such as Opteon have also reported they are looking to launch virtual valuation services which will use a combination of visual verification aides and a guided interview to provide the valuer with key information about the property and its current state.
Valuations is sometimes more an art than a science. The key is an effective valuation strategy combined with responding to valuation feedback and adjusting the strategy throughout the settlement process. The way we handle this at KIN is by developing a valuation strategy including strategic broker, purchaser and valuer management to achieve the best valuation results for your purchasers.
The impact of Government directives
Social distancing restrictions means it is essential that on-site inspections are managed with care. The penalties are steep and will only add further issues into the settlement process. It is undoubtably about protecting our community from the spread of Coronavirus.
The KIN approach to this is to use private inspections, digital tools, personal protective equipment and hygiene measures and the appropriate social distancing. These measures are ensuring that inspections and handovers can continue, while still doing the right thing.
The risks are real but help is at hand
Property developers are clearly not immune to the impacts of COVID-19, however its impacts must be managed if property developers are to maximise timely settlements in the current environment and that’s where we can help.