The Melbourne property market has remained one of the strongest and consistent performers over the last four decades. Just as signs of a quick market recovery began to show following lockdown 1.0, with transaction numbers lifting substantially through June and July and buyers and sellers entering the market, Melbourne entered Stage 4 ‘Stay at Home’ Restrictions once more.
With most of Victoria remaining in Stage 4 lockdown for just a while longer, you may have questions about what the rest of 2020 holds for the Melbourne market, and what this could mean for you if you were thinking of selling or buying a property.
Upside held a free webinar event with Tim Lawless, Head of Research at CoreLogic to talk about what we could anticipate from the Melbourne housing market in the days to come, with helpful advice on how you should prepare if you need to get on the market.
We have created a podcast from this webinar, and it’s free for you to listen to here:
So, what lies ahead for the Melbourne property market?
The first lockdowns brought shock to the economy, and with the pandemic fresh in mind for most, we entered into a period of uncertainty for what the future holds. When social distancing policies gradually lifted, the market bounced back relatively quickly, with transaction numbers lifting quite quickly in the months of May to July.
August saw activity fall substantially, but the property market will be working with seasonal trends as we begin to come out of the second round of lockdowns, with those who need to sell and buy property falling back into rhythm.
Moving through the disruptions of 2020, we will begin to see much of the stimulus package tapering, with JobKeeper winding back and JobSeeker extended but with less, in addition to September lining up with when lenders will begin to have their six month check-ins with borrowers.
We will begin to see borrowers who haven’t been able to maintain their payments begin to offload properties, acknowledging they may not be in a position to resume payments, but the extent of this impact also depends on how the housing market bounces back.
My guess is it’ll be a very gradual trend and we have seen lenders bending over backwards to be as lenient and manage borrowers and investors as carefully as they can", said Tim Lawless.
At the present time, the number of new listings being added to the Melbourne marketplace is about three-quarters lower than it was a year ago (down about 75%). In the last four weeks, a mere 1700 properties were added to the market, with the total number of properties across the market sitting at about 18,000 (20% lower than where it was last year). There is a palpable shortage of stock on the market at the current time, but the numbers will inevitably bounce back soon
A big indication of the direction of the Melbourne property market also rests on consumer confidence in the coming weeks. However, sentiment indicators seen over the past three weeks suggest improvement in consumer confidence, showing that as we approach the end of this period, people are feeling empowered by the fact the virus may be flattening, potentially reflecting a return to a new normal.
Record interest rates - who is taking advantage?
Finance data gives us insight into which sectors of the marketplace are more active or inactive. At the present time, first-home-buyers are the most active segments, making up around 30% of mortgage demands and taking advantage of the relatively quiet actions of the investor segment (who are sitting at only around 25% of mortgage demand). With prospects for capital gains a little more uncertain, and rental yields under a lot of pressure, particularly in popular areas like inner-city apartments, first-home buyers have surged ahead to take advantage of record low interest rates.
Similarly, the upgrader/downgrader market has seen a flurry of activity, with people taking advantage of low stock levels. Moreover, vendors listing now are seeing very short days on market while being able to refinance and get a very good deal on the cost of debt
The challenges facing the upgrader/downgrader segment lies in the fact that with the low number of stock currently on the market, offloading a principal place of residence could present a risk.
A little window of time
As we come into a period of uncertainty, there is an expectation that urgent sales will begin to make their way to the market, signifying the tapering off of government fiscal support with distressed borrowers acknowledging that they probably won’t be in a payment position come the 31st of March.
Nationally, on a year-on-year basis demand remains up by 25.3 per cent, according to the latest weekly property demand insight report released by realestate.com.au. Following nine consecutive weeks of falls, demand rose by 0.2 percent in Victoria last week. Although marginal, this could be the start of a new recovery trend as the state begins to take it’s first steps towards re-opening.
Over the last 3 weeks, across NSW, ACT and QLD, Upside has seen record amounts of attendance at our open homes, with the average number of buyers per property at the highest since Upside’s inception 3 years ago. On the ground, we are also seeing properties selling very quickly, with days on market coming back.
In Victoria, it’s interesting to note that just before lockdown, Upside saw the highest week of market appraisals since the beginning of the year, with vendors keen to get their homes on the market. This has continued to be the pattern throughout lockdown but online, with vendors keen to understand the market value of their homes and how to proceed going forward from lockdown.
How do I capitalise on this window of opportunity?
With many people waiting to see what will happen following the end of Victoria’s restrictions, it will be those who are acting now - getting in touch with their local agent to best understand their home's value, and booking in their photography - who will be ahead of the crowd when lockdown finishes.
The window of opportunity is a small one, so if you’re planning on selling, remember that those who act now will be able to take advantage of the record low stock amounts, and insulated house values and low competition before the influx of properties going to market.
Matthew Florence, Upside Victoria area manager mentions a few key items which we see to bring success in any market:
- Strong presentation (Be noticed on the real estate portals)
- Correct pricing (is your home priced to compete with others, don't let it be overlooked in a Real Estate search)
- Don’t waste money on unneeded promotion and cover that basics well, such as a signboard, brochure, main portals.
Ask yourself the question: “what is promoting my property, and what promotes the agency or agent without return to the client?”
There is no better time than now to understand what your home is worth. The market will differ based on your local area, and the best way to find out the value of your property is to talk to your local Upside agent. Simply book a time directly into my diary to organise a free, no-obligation property appraisal and find out what you should be doing right now to prepare your home for a sale.