Stage 4 restrictions in metropolitan Melbourne, in addition to measures in regional areas, remain in place as Victoria continues to fight its second wave of coronavirus.
While a roadmap to “COVID normal” has been outlined by the state government, there are still significant steps to be taken.
Though private inspections by appointment have now been reintroduced, they are limited to one client (dependants and a partner may also attend) only, while outdoor auctions remain off.
Further easing is dependent on the state-wide daily average and total number of cases with an unknown source in the previous 14 days dropping to less than five.
The market impacts
The Victorian lockdown has been difficult for citizens, businesses and industries alike – the property industry is no exception.
According to CoreLogic’s September 2020 report, Melbourne’s dwelling values fell by 1.2% in August1 – though volumes were already low, in light of the current circumstances.
Despite this, values are up 5.9% annually1 – with the market’s monthly decline offset by its existing strong baseline, on the back of soaring to a record high in March 2020.
National numbers indicate similar resilience – with overall values dipping by only 2% since the beginning of the pandemic2.
Annual dwelling value changes (August 2020)1
- Melbourne: +5.9%
- Sydney: +9.8%
- Brisbane: +3.5%
- Perth: -2.0%
- Adelaide: +2.7%
This paints an encouraging picture for the sector. While the market has taken an inevitable hit as a result of COVID-19, the damage, as yet, has not proven to be as severe as initially feared.
A different Spring season
Spring has sprung, but for the property market, the traditional buying frenzy may arrive under a different guise and unusually late in the year, potentially pushing into early 2021.
Current circumstances have driven new listings down 76% in Melbourne year-on-year1 – indicating that the coming weeks probably won’t deliver a seasonal market rush.
However, this may be the calm before the proverbial storm in Victoria.
Market rebounds have been observed globally – the United Kingdom reported record house prices in August4.
Elsewhere, Canada’s new listings rose by more than 10% in August, alongside a record high for sales5.
In both countries, a release of ‘pent-up demand’ for consumers has been widely attributed to these gains.
A similar story in Victoria?
Having spent more time in their homes than ever before, many Victorians are re-evaluating their lifestyles – assessing their property needs and wants.
It’s reasonable to expect market movement when restrictions ease in Victoria. Those in advantageous positions seeking to buy, financially impacted households looking to reduce their debt obligations, families adjusting to shifts in priorities and working arrangements, relocations and more are all active factors in generating activity.
Additionally, the usual candidates – empty nesters, those upgrading or downgrading, as well as first homebuyers leveraging the grants made available by the government will all be eager to buy and sell.
On our shores, June 2020 was the biggest month of sales in Perth since 2015 – a local example of how the transition out of COVID-19 restrictions can be a trigger point for transactions.
The usual spring rush may not eventuate – instead, there’s every chance we’ll see a late spring or early summer boom in Victoria’s property market.
COVID-normal
The million-dollar question remains – what will a post COVID-19 market look like?
The Reserve Bank of Australia’s (RBA) maintenance of a record low 0.25% cash rate, which appears set to remain in place for the long-term future, provides a source of confidence for prospective homeowners.
While there’s still much to play out, there remains an inherent resilience in the Australian property market and in line with patterns observed in other states and countries, a recovery may be on the cards in the short term for Victoria.
