‘Who knows what the inside is like?’ The Australians buying houses they have never seen By Calla Wahlquist
A surging market and travel restrictions are forcing many to take a gamble on properties solely based on photos and videos.
Erin Lyall has spent the past five weeks walking the streets of Sunbury via Google Street View, looking at houses.
It’s not how she imagined buying her first home. But with Melbourne spending nine of the past 15 weeks in lockdown, and the clock ticking on her financial approval, Lyall decided not to wait.
“I never considered buying sight unseen. Even as recently as a week or two ago, I was absolutely set against doing it this way,” Lyall says. “But I just kind of came to the realisation that even if they did open up to inspections, there was a chance we could end up in isolation for two weeks anyway [because of visiting a Covid exposure site], and our finances are running out by the day.”
On Tuesday the 35-year-old and her partner made an offer on a house they had seen only through photos and videos, conditional on the property passing a building and pest inspection.
It was refused, in favour of an offer with no building inspection requirement. Probably a sign of a narrow escape, Lyall says, but not enough to put her off doing it all again if the right home comes up.
Buying a property sight unseen used to be something done only by investors, or people moving from overseas. But border closures and lockdown restrictions coupled with a booming housing market have meant more people like Lyall are making the biggest purchase of their lives based on little more than a video tour.
In Melbourne, prospective buyers and buyer’s agents have not been allowed to do private inspections during the recent lockdown, though that is slated to change when the first-dose vaccination rate reaches 70% later this month.
Fear of being priced out
Many first-time buyers are also worried that if they do not buy quickly, they could be priced out of the market.
“Last year, once lockdown ended, the market went crazy,” Lyall says. “There was a lot of competition, prices going wild. And we thought, well, maybe it’s a better thing to put in an offer if we find the right place now.”
The fear is not unfounded – house prices in Australia are growing faster than at any time since 1989.
Prices have risen by 12.4% year-on-year, according to Fitch Ratings. In the June quarter the rise across Australia was 6.2%, the highest quarterly increase in more than a decade. All capital cities recorded growth, and six cities registered double-digit growth.
Prices are rising much faster than even a well-off person’s ability to save, and far beyond their ability to earn.
But while many have suffered a significant financial hit due to Covid-19, the household savings of well-paid white-collar workers who kept their jobs during successive lockdowns have increased.
The housing bubble shows no signs of bursting. In Melbourne, competition for affordable properties, or what counts as affordable in this market, is strong.
Lyall and her partner began looking in April. In the months it took to settle on Sunbury as their suburb of choice and secure finance, the number of houses available in their price range dipped lower and lower.
“There are places that sold in the area in March and April that would be like dream homes to us,” she says. “They are well, well out of our budget now.”
‘We are taking the gamble’
Fear of being priced out is one of the reasons Alice Kemble and her husband bought a house in Canberra this summer, several years before they intend to use it.
“We were just watching the property prices grow, and just thinking: we have some money now, and it is probably going to cost a lot more in a few years’ time,” she says. “We wouldn’t have been able to afford that area if we’d waited much longer – maybe even now I don’t think we would be able to afford it. So it was a question of taking the chance of doing it online versus probably not being able to get into that suburb later on.”
They were living in Townsville at the time, and wary of flying through Sydney, which was going through a Covid outbreak on the northern beaches. They made an offer on the basis of several Facetime inspections, a lot of time on Google Street View, a past knowledge of the area and the opinions of two Canberra-based friends – one positive, one negative.
The couple has since moved to Melbourne, and will spend several years in Timor-Leste before returning to Canberra to see if the house they bought will be the family home of their dreams.
In March, a month after settlement, they were able to drive by and see their new house – from the outside only, so as not to disturb the tenants.
“It was the most nerve-racking thing,” says Kemble. “I had my husband’s friend’s voice in my head saying: it’s terrible, it’s terrible. But the street was really lovely and really relaxed. Who knows what the inside is like, but I think it’s a really nice location, so we’re happy with that.”
The 39-year-old has already picked out the oven she will install when they finally move in and is planning the rest of the kitchen. Planning a future is important, she says. Even, or especially, if the present is uncertain.
“We are going to get through the pandemic at some stage, we are going to come out the other side of it,” she says. “We don’t want to come out the other side and have missed the opportunity because of rising costs, or whatever. We are taking the gamble that life is going to keep going on.”
Perils of real estate photography
Buying a house without any capacity to conduct inspections is not a gamble the experts recommend. Lynda McNeill, a buyer’s advocate in Melbourne, frequently facilitates long-distance property purchases and conducts inspections on behalf of clients. This is currently not allowed in the city – even real estate agents and buyer’s advocates are not allowed through.
She does not recommend that anyone buy a house on the strength of video and photos alone, unless they are buying off the plan or intend to demolish and start again.
“At the moment I am not recommending that anyone buy,” she says. “It is such a big purchase and you can’t take it back.”
That advice is seconded by a real estate photographer who tells Guardian Australia, on condition of anonymity, that it is accepted practice to Photoshop anything that is not a permanent feature, right down to the furniture and light fittings. Rooms seem brighter, larger and more inviting in professional photos, and as a result the reality can be disappointing.
However, in Melbourne at least, some buyers are getting desperate
“We have a situation where a lot of buyers have sold before they have bought, and the settlement date is approaching,” McNeill says. “There are a lot of people left in distress who can’t buy because we can’t go through and inspect.”
Lauren was ahead of the curve. She bought her home in Ballarat during the long Melbourne lockdown last year. She had been living in a one-bedroom unit in Werribee that she bought in 2015, but when the pandemic hit, “the walls began slowly closing in on me”.
Buying a bigger house in her budget meant looking in regional Victoria – off limits for a locked-down Melburnian to visit. She employed a buyer’s advocate and asked her parents, who live regionally, to conduct inspections for her.
The house she chose – a comfortable two-bedroom property with a small yard for her dog – had a “good vibe”, even on video, she says. “I could imagine myself living there.”
She signed the contract in September and, after a delay to make sure the tenants had found a new home, moved in on 30 June in the narrow gap of freedom between Victoria’s fourth and fifth lockdowns.
“Walking into the property, I just felt relief,” she says. “I hadn’t made a mistake. I guess I sort of had that anxiety until I saw the place in person that maybe I made a mistake, but once I saw it, I knew I hadn’t.”
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