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“Very Likely” To Cause A Rise In Divorce

With Coronavirus and in turn self-isolation still applying in Victoria until the end of June at the very least, an update depicting the real estate market may assist those advisors as to when a shift in property both for residential and commercial maybe expected to occur.

Current feedback from family lawyers in Melbourne would indicate that the pandemic may be a catalyst in having a direct effect on the number of separations and hence, divorce proceedings.

Most lawyers commented that they have seen an increase in level of disputes within the family law area.

From a valuer’s perspective, it may be an opportune time to provide some key factors within the current real estate market, being within both the residential and commercial sectors.

The residential real estate market in general terms and in particular those suburbs within the inner and medium precincts of the Melbourne Metropolitan area has definitely seen a change in recent weeks.

Yes, it is now winter and traditionally the winter months are considered in hibernation with few properties on offer, but due to the pandemic and lifting of State Government restrictions, we are now witnessing a medium to high level of property participants back again in the market place, with definite feedback from real estate agencies that numbers have increased dramatically.

How would one summarise the current state of play in a word … caution. Yes, numbers are up, yes, interest rates are at an all time low, but market forces are and will be in flux for a medium term period. The writer’s belief of the residential market within the stated designated areas would be a “static” market, with few offerings and listings. Simply, why sell now? Numbers usually decline within the winter months of Melbourne, and more so this year due to Covid-19. It would seem that most Vendors are happy to ‘wait and see’.

The other side of the flip currently is that due to low numbers of offerings and changing guidelines by both State Government and in turn the Real Estate Institute of Victoria, public auctions are back and with this insight, the market may just be a different market place pre-spring. Also bearing in mind that JobKeeper may be withdrawn later in 2020.

Within discussions with major residential real estate agencies, agents are confident, as usual, and do not want to commit as to the likelihood of the real estate market being stable or even decline.

From our perspective, if one was to negotiate an outcome, the current residential real estate market provides a degree of continuity of pre Covid-19 with sales reflected some 6-12 months prior, however, taking into account current Covid-19 conditions. The key factor is that the current environment has in fact provided few sales. Therefore, from a negotiation point of view, current circumstances may just provide the better period than the second half or last quarter of 2020.

In regard to the commercial real estate sector, a myriad of factors are in play. The major factor, as participants in this sector are well aware of, is the ability of the property to provide an income stream and at what level? Simply, the sectors across the board have seen a general decline in rental levels of up to 50% from the commencement of the pandemic.

Yes, the repayment of lost rental is to be repaid but there will be a large number that will not. In simple terms, regardless of circumstances moving forward, the question will be the variance between a face and effective rental and hence, its direct effect on the capital improved value of the property. The other factor that one needs to consider is the adopted yield now to be based on current market forces, inclusive of what exactly is a “AAA” tenancy, reduced sizes of areas, shorter lease terms, with discretion on Lessee requirements rather than Lessor. It goes on and on. The rub being not dissimilar to the residential real estate market, being if in dispute? Determine value now rather than later.

Property valuations are a necessary evil within the family law process, moreso in this difficult period. Could I suggest that before you formally instruct a valuer, you request a Desktop Opinion as to what a property may be worth. Yes, it is an Opinion, but for decision making purposes, especially in these uncertain times, it may help your client make a very important decision.

For a quiet chat, opinion as to value or any formal valuations and advisory,
please do not hesitate to contact Mark Ruttner on 0411 419 674.

First Valuation Group
Ground Level, 18-22 Thomson Street
South Melbourne, Vic 3205

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