The Melbourne property market is starting to show signs of recovery after a prolonged lockdown period had ground activity to a halt.
Since the latest phase of lockdown measures have lifted, property professionals have been able to get back business, and this is starting to filter through to sales and listing data.
Despite a lack of transactions, property prices in Melbourne have remained relatively stable throughout 2020. Auction clearance rates have been high along with auction activity, while sales are starting to increase, and importantly, homeowners are now prepared to list their properties for sale.
According to data from Ripehouse Advisory, listings are already starting to surge higher.
Ripehouse Advisory, Head of Research, Will Farrell has likened the surge in new listings to ‘Lazarus Rising.’
“New listings dwindled to only 200, across the whole state, by the end of August.”
“The market saw a jump at the start of September before plateauing until late in the month when listings spiked - unsurprising given this is when Victoria entered the second step of lockdown roadmap.”
First Home Buyers The Big Demographic Driver
Simon Kuestenmacher, Co-Founder & Director of Research at The Demographics Group says the surge in listings is not surprising given the prolonged period of lockdown.
“If you’ve had a couple of months of people in lockdown, there’s no real opportunity to list properties. You can only do virtual walkthroughs and it feels like you would diminish your chances of making a good sale of your property, so you wouldn’t.”
“Most people that can afford to sell a property, can actually wait a couple of months, some even years. The big question is really, will sales go back to pre-COVID levels or will they spike and then flatten out to lower than where they were.”
Mr Kuestenmacher says that while it’s important to see confidence returning with listings rising, it’s also important to consider who will be buying those properties.
“In Melbourne, the main groups to enter have been shrinking. They are international students and international migrants.”
“Traditionally these group of people always go to Sydney and Melbourne as a launchpad destination. Not having these new arrivals is an argument for lower property demand from that segment.”
Mr Kuestenmacher believes that it is millennials and other first home buyers that will really be leading the charge to buy in outer-Melbourne.
“Millennials are now starting to have kids and are looking for family-sized housing which are 3-4 bedroom properties.”
“If I’m a millennial in the inner city, I can’t move within my suburb because there is nothing available there. So they need to go to where they are available, which is outside the inner ring of Melbourne.”
According to Mr Kuestenmacher, there are large amounts of homes that would be suitable in the middle ring suburbs of Melbourne, but the baby boomers that are living there are not looking to move.
“The vast majority of 3-4 bedroom properties are available in the outer suburbs and regional towns, so that’s where they might go.”
Transactions to Continue to Rise into 2021
Adam Docking, Senior Vice President of the REIV, suspects the surge in both listings and transactions to continue well into 2021.
“There’s a big pent up demand at the moment. The really busy time is that Spring into Christmas rush which is generally when we make half our sales.”
“We’re thinking that we are going to go all the way through this year and Christmas will be just a long weekend.”
Mr Docking believes there will continue to be strong demand for areas outside the inner ring suburbs.
“As long as the banks remain fair, we should see strong demand but the boom areas are likely to be the Mornington Penisula are places like that.”
“I think people are now going to be less tied down to locations based on employment given they can work remotely now, so I think we’ll start to see people moving out of the traditional CBD suburbs.”