COVID-19’s Impact On The Melbourne Property Market
Amongst the recent Victorian lockdown which has confined much of the population to their homes, it’s worth taking a look at the overall impact of COVID-19 on the Melbourne property market. Melbourne’s residents are unable to leave the house except for the most essential tasks, so it follows that residential property sales activity has dropped to an all-time low. Indeed, the previous lockdown period, from March to May, 2020, saw real estate agent activity slump by 70%. This number has, since the 8th of July (when Stage-4 restrictions were put in place), essentially plummeted to zero, the lowest value since the 1990s.
In the first lockdown period, from March to May, the number of new listings added to the Melbourne market more than halved. However, perhaps to compensate for the previous slump, the number of listings rose in July to 34% more than the year before. In the period since the Stage-4 restrictions were implemented, however, active listing numbers have fallen again to extremely low volumes. Most recently, over the last two weeks of Winter and the first two weeks of Spring, the number of new residential property listings in Melbourne fell by 11.5%.
The overall trend in residential property market activity is lower than pre-COVID highs that were stimulated by large capital growth in Melbourne. The rate of decline in market activity has eased over the last five months. Melbourne has seen the biggest decline in property values of any Australian capital city. Property prices fell 1.2% in August and have fallen 4.6% over the entire COVID-19 period. Home sales volume fell by one third between March and April, recovered slightly, and then have fallen a further 20% since June.
It’s Melbourne’s wealthiest that have been hit the hardest by the pandemic. Property prices in Melbourne’s top quartile have fallen by 7% since March, compared with the lowest quartile, which has only dropped by 1.7%.
Despite these losses in market activity and property values, average Melbourne property values are actually sitting 5.9% higher than they were 12 months ago.
Market activity, all things considered, is less than normal compared to this time last year. Activity within the property market tends to rise in Spring, however this year fell by 1.9% in August, before Spring had even started.
Looking forward, we’re moving towards a diverse housing market outcome. Housing markets are typically resilient during pandemics, so we’ll continue to keep an eye out for any changes in market conditions following the easing of restrictions.
If you’re looking to buy property in Melbourne it’s certainly a good time to buy. Despite limited market activity, the decline in housing values in Melbourne make property purchases attractive to new home buyers and investors. Contact Pillar Financial today if you’re interested in taking the next step in property investment.