Up to $20bn could be wiped from the Victorian economy if real estate restrictions extend well into spring, as the state government plans.
A whopping average of $19.92bn in property sales was recorded during each spring selling season over the past five years, analysis by property research firm CoreLogic has revealed.
But experts say an extended ban on physical home inspections to at least October 26 — assuming the state records fewer than five daily COVID-19 cases over the previous two weeks — amounts to “a death sentence” for this year’s spring market.
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Melbourne’s spring selling season has been hard hit by coronavirus restrictions. Picture: Tim Carrafa
Lyn Davenport and her daughter Grace can’t inspect rentals due to a ban on physical inspections. Picture: Alex Coppel.
Street auctions are also off the table until late November, when the real estate sector is expected to be able to operate more freely if case numbers hit zero for a full fortnight.
The extended lockdown could also strip billions from Victorian government coffers, which were due to collect more than $6bn in stamp duty revenue across 2020.
CoreLogic head of research Tim Lawless said 15,544 properties hit the market in September and October 2019. But fresh listings were now “tracking 76 per cent lower” than a year ago.
CoreLogic head of research Tim Lawless commented on the severe drop.
“The drop in market activity has negative implications for stamp duty receipts across Victoria, which comprise one of the largest revenue sources for the state government,” he said.
Real Estate Institute of Victoria president Leah Calnan said weekly auction volumes had plunged 97 per cent from a year ago, with just 21 conducted via online platforms last week.
The peak industry body estimated about 12,000 properties usually went under the hammer between September and November.
About $20bn is spent in the spring selling season. Picture: CoreLogic
“No new properties are coming on to the market and almost no transactions are happening,” Ms Calnan said.
“The real estate industry contributes approximately 46 per cent of tax revenue into the government, so it’s really important the economy works out a way we can continue to work.”
The Real Estate Industry Partners’ agency network calculated every property transaction also poured an average of $120,000-$150,000 into related services, like photographers, signage businesses, conveyancers, stylists, cleaners and gardeners.
Gardening, cleaning and styling businesses have also been hit by lockdown.
Real Estate Buyers Agents Association president Cate Bakos said the requirement to meet case number targets before lifting restrictions could drive homeowners to scrap their sales plans altogether.
“It will depend on why the vendor is selling. Some may still have to move if they have a baby on the way, or need to be school zones before next year,” Ms Bakos said.
“I envisage a very distorted spring market, which more or less infiltrates December and January and becomes a summer market.”
Buyer’s advocate Cate Bakos said agents would work into summer. Picture: Mike Dugdale
Veteran real estate agent Philip Webb declared the inspections ban “a death sentence” for the spring selling season, noting “no one buys houses they’re going to live in without walking through”.
Ray White Group managing director Dan White said the road map’s unveiling last weekend triggered a wave of calls from vendors “distraught” at the prospect of further delays.
He noted hardships like “illness, divorce or … unemployment” often left people with no choice but to move.
Tim Drew and his wife Sam have stalled listing the house they have already moved furniture out of. Picture: David Caird
When asked about the inspections ban last week, Premier Daniel Andrews didn’t rule out exemptions for Melburnians who desperately needed to buy or sell.
“We’ve always welcomed people making their case,” Mr Andrews said.
“I know there are many in the real estate community and vendors who would love different settings. But a bit like pubs and restaurants and cafes, they wouldn’t be back to normal for long.”
Belle Property Balwyn principal director Robert Ding said the government should have deemed real estate an “essential service”.
“People have already sold their properties and need to find somewhere to rent or buy, because they’re going to be homeless otherwise,” he said.
— with Samantha Landy
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