The crippling second wave of COVID-19 has left Melbourne facing a 15 per cent fall in home prices by next year, according to a major bank.
This was the largest peak-to-trough decline ANZ predicted for an Australian capital, ahead of Sydney (-13 per cent), Darwin (-9 per cent), Hobart (-8 per cent) and Brisbane (-6 per cent).
The big bank found Melbourne house and unit prices had already shed 2.2 per cent between March and July — even before tough stage four restrictions all but shut down the property market.
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COVID-19 hasn’t been kind to the Melbourne property market. Picture: NCA NewsWire / Andrew Henshaw
But it labelled this decrease “slightly more modest than we expected”, with government support payments like JobKeeper, superannuation withdrawals and deferred mortgage repayments helping keep the market afloat for now.
Melbourne’s inner-ring rental market had been hit hardest by the pandemic, with asking rents plunging 22.2 per cent in the CBD and 12.7 per cent in Southbank as new listings simultaneously soared 111 per cent and 130.6 per cent respectively.
ANZ expects Melbourne dwelling prices to fall 15 per cent by next year. Picture: Jeremy Piper
ANZ senior economist Cherelle Murphy said a dramatic decline in demand for housing had hurt both the sales and rental sectors.
“You’re going to have a greater unemployment problem in Melbourne simply because of the lockdown, (so) demand is going to be diminished,” she said.
Border closures stemming the flow of migrants and international students was also reducing demand for homes in Melbourne which, along with Sydney, was “a gateway to Australia”, Ms Murphy said.
Stage four restrictions had held back available housing supply too, scaling down the construction sector and making it difficult to list properties by banning real estate agents, photographers, stylists and buyers from attending homes.
Ms Murphy said among the doom and gloom was a silver lining for tenants who had remained financially untouched by COVID-19: “opportunities for cheaper rent”.
“If you’re a renter, the ball’s in your court. We have seen some substantial falls in rent in some very desirable areas,” she said.
In addition to Southbank and the CBD, these included Abbotsford, where rental listings had skyrocketed 104.2 per cent and asking rents plunged 17.6 per cent, Docklands, 101 per cent and 1.8 per cent, and Albert Park, 88.9 per cent and 11.5 per cent.
Realestate.com.au chief economist Nerida Conisbee said the inner-Melbourne apartment sector was leading the city’s downturn, while premium suburbs seemed to be “holding up” better due to the fact “we’re not seeing as much job loss in white-collar professions”.
Despite this, dwelling prices were “fundamentally being held up by the fact banks have been supporting their customers”.
“A lot of it is hinging on, will banks support people through this and how much job loss will we see?” Ms Conisbee said.
“If we do start to see (mortgage defaults), that would lead to quite a significant decline.”
-with Jack Boronovskis
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