Melbourne Housing Prices Skyrocket As Availability Declines
Melbourne and Victoria are once again in COVID-19 lockdown, and the consequences of this have left many homeowners and property investors in a state of uncertainty. A look back at Melbourne housing prices over the last lockdown, however, delivers promise that not all hope is lost for real estate moguls. Sales figures after 2020’s lockdown reached record highs in some metrics, despite inspections and face to face time with realtors being largely unavailable.
Restrictions on face-to-face sales were active from August to late October, 2020. Unsurprisingly, during this time the median housing price dropped 2.6%. Housing prices then rose after lockdown ended. A sense of desperation was almost palpable after lockdown ended and people had saved more capital than usual during their time working from home. The combination of these two factors caused the real estate market to rapidly gain momentum.
The period from October to December, 2020 saw Melbourne housing prices rise by 3.4%. This was about 3% greater than the average national increase in housing price at the time. Housing prices rose to a median value a little less than was held the year before, in 2019. Unit prices, however, reached unprecedented median values in Q4, 2020, as did houses located in regional areas.
In contrast to high values, sales numbers did drop significantly during this time. The number of houses in Melbourne that were sold post-lockdown was almost 20% less than in 2019. This may have been due to low listing numbers. The drop in number of sales was not the case in regional Victoria, where the highest number of houses since 2010 were sold in Q4.
At the end of Q1, 2021, the average time property spent on the market had declined by more than 20%. Furthermore, property across the entire country experienced the highest monthly increase in value since the start of Q4, 1988. Melbourne property prices continued to rise in value; by a total of 4.9% over the quarter. Despite COVID-19, or perhaps because of it, housing prices in regional areas were 11.4% higher than in the past year, clearly demonstrating the popularity of migration to regional areas during the pandemic.
However, as may have been the case in Q4, 2020, the number of listings in Q1, 2021 was substantially lower than in years past: more than 25% below the last five-years’ average. Indeed, for every new listing, 1.1 homes were sold. Coincidentally, houses in regional areas of Victoria became very unavailable as people moved away from the city to avoid the spread of the pandemic.
The Reserve Bank has said that it won’t explicitly raise interest rates to try to lower housing prices. In contrast, some economists are predicting that lending limits will be imposed which could restrict housing options for first home buyers. There is conflict within the economists’ sphere, with some predicting regulatory changes won’t happen unless the quality of lending diminishes. Other economists are saying that regulators will step in soon.
In conclusion, the current lockdown situation might deliver fortunate circumstances for home owners looking to sell in the near future. However, housing availability may become even more restricted which would put more barriers in the way of first home buyers entering the market.
Pillar Financial is open to take your call Monday to Friday, 9:00am to 5:00pm. Call our friendly team on 1300 730 309 to ask what we can do for you as you begin or continue your journey towards buying a residential property in Victoria.