Melbourne’s real estate industry is preparing for a slow down in property sales under stage 4 restrictions with private home inspections banned until at least mid-September.
Property and real estate businesses closed from 11.59pm Wednesday 5 August, but online inspections and auctions are still permitted under the strict new measures to stop the spread of COVID-19 in metropolitan Melbourne. Auctions have also shifted online in regional Victoria under stage 3 restrictions, but in-person inspections by private appointment can go ahead.
Melbourne property sales are expected to slow during the six-week stage 4 lockdown period. Picture: realestate.com.au/buy
Victorian Premier Daniel Andrews addressed changes to the rules around real estate during a press conference on Friday: “I’m not expecting any real estate agent to be particularly happy about that, and I’m not expecting any person wanting to sell a house necessarily to be happy with that either.
“That’s just what we have to do, we can’t have groups of people even with pretty low limits, we can’t have people gathering, that’s not conducive with getting those numbers down,” Premier Andrews explained.
During the six-week lockdown, private inspections for new property listings in metropolitan Melbourne are banned, meaning virtual inspections will be the only alternative. The only exception to that rule is for final inspections relating to the settlement on a property that sold prior to the lockdown, according to the Real Estate Institute of Victoria (REIV).
“It falls under the services relating to property settlement, so a pre-settlement inspection could take place, the locksmith could attend to change locks, even, we understand, a valuer could attend prior to the upcoming settlement, said REIV president, Leah Calnan.
Impressively, there are 235 online auctions scheduled across 133 suburbs in metropolitan Melbourne this weekend, but the numbers are expected to decrease over the coming weeks.
Property transactions will drop but prices will be “shielded”
The banning of private inspections in Melbourne is going to be detrimental to the property market, and while virtual inspections will offset the impact, most home buyers want to see a property in person before making a big financial commitment, said executive manager of economic research at realestate.com.au, Cameron Kusher.
“As a result, property transaction volumes will fall in Melbourne during stage 4 restrictions,” Mr Kusher added, but he said a lack of transactions will likely shield the property market from severe price falls.
“As we saw during the first Melbourne lockdown, the shutting down of the industry may result in pent-up demand for housing, which could very well be unleashed once restrictions are lifted,” he said. “Private inspections can still continue in regional Victoria, which is encouraging, but we expect there to still be an impact on turnover. A lot of regional demand comes from Melbourne, so Melbourne’s tougher restrictions will affect regional Victoria.
The spring selling season will be different this year
Melbourne buyers advocate and Real Estate Buyers Agents Association of Australia (REBAA) president, Cate Bakos, predicted Melbourne’s 2020 spring selling season will be “completely different” because of the stage 4 lockdown, which will likely extend the season.
“Provided our lockdown has full effect and and we manage to reduce our [coronavirus] cases significantly, it will push out our spring selling season until very late spring,” Ms Bakos explained.
Melbourne’s spring selling season will likely push out due to pent up demand following the lockdown. demand Picture: Getty.
“I think what we’ll see is a lot of vendors that don’t have to sell [during August] withdrawing their properties from the market…We’ve also got all of the listings that are yet to hit [the market] for spring campaign. So in other words, the vendors with an intent to auction their property in September, we will see them making the decision to either push that back or not sell for now.”
Ms Bakos said that it is likely strong demand will create a buzz of activity in Melbourne’s property market if restrictions are eased in September, saying the city has already witnessed a bounce back after a first round of lockdowns.
“It did essentially bounce back, not to the full speed but not far off it. We didn’t have the price falls that some economists suggested we would,” she said.
“Also, it’s become progressively difficult getting loan approval. It’s not a straightforward process and so for a lot of people who have gone through that process know how precious [pre-approval] is and a lot of people don’t want to waste that, they’re really committed to moving forward. So I think we’ll have a lot of people wanting to jump out of the blocks once we’re allowed to get out and about.”
“We’ll still have buyers that come out in spring and say: ‘right, we’re ready to buy’, expecting to have a bit to choose from and more stock. If we do have vendors that are standing back saying: ‘no it’s just too risky or too difficult, we’ve got too many restrictions’, we might find that we’ve got an even tighter supply issue than what we have had.
In terms of the timing of the six-week Melbourne lockdown, Ms Bakos said, even though it does encroach on September, it’s better for it to happen during August when sales volumes are typically lower than later in the year.
“It will hurt real estate agencies…it will be really distressing for people that have to sell and for people that have to find a new rental property, it’s just a really difficult measure all round. But if we had to pick a period of time where we’ve got the least number of people adversely impacted, we’re probably close to it,” she said.
Agents are preparing for “a rampage of activity” post-lockdown
Sales director at Marshall White – Stonnington, John Bongiorno, said his team is very much focused on using the next six weeks to prepare for the spring selling season, saying he’s expecting “a rampage of activity”.
“We’re just focusing on what we can do and not what we can’t,” Mr Bongiorno said. “We’ll get our agents to get in touch with potential vendors and talk to them about things that you can do to get their properties ready while they’re in lockdown.
Agents are using the next six-weeks to prepare for “a rampage of activity” post-lockdown. Picture: realestate.com.au/buy
“If you look at what happened in New Zealand, they’ve had their three busiest months, just about, on record in terms of real estate transactions. We see that activity will go through the roof when we do get out of lockdown so we’re just focusing on what we can work on as opposed to what we can’t.
Ms Calnan said while the private inspection ban in metropolitan Melbourne is disappointing, she is certain the real estate industry will continue to show the same level of resilience it has upheld since the pandemic began.
“[Agents] are frustrated but they understand, they want to make sure that they’re doing their bit to eliminate coronavirus,” she said.
“Even though we anticipate there will be very few [property] transactions over the coming six weeks, we’re confident that there will be no change to the median house price, and it will create a longer spring market campaign than what we normally see,” Ms Calnan added.
The impact on Melbourne’s property market will be short-term
While Melbourne’s stage 4 lockdown will impact the property market in the short-term, these restrictions are not permanent and won’t change the way we buy, sell and rent property in the future, said chief economist at realestate.com.au, Nerida Conisbee.
“Victorian consumers and businesses have already shown how resilient they are and should remain confident that once the health crisis is under control a sense of normality will return, which is what we’re seeing across the rest of Australia, Ms Conisbee said.
The six-week lockdown is not expected to have a long-term impact on Melbourne’s property market. Picture: realestate.com.au/buy
Ms Bakos said the secret to the future health of Melbourne’s property market lies in supply and demand.
“If we had a whole host of vendors flooding the market and creating a bit of imbalance to the supply and demand ratio we’ve had of late, we could have anticipated some price falls. But if our supply and demand equation remains tight, I think that we’ll see prices underpinned somewhat by such tight supply,” Ms Bakos explained.
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