Auctions, New Home Sales Up Despite Lockdown

The second wave of Covid-19 is yet to hit the Victorian property market with positive initial results for auctions and new home sales recorded.

There were 475 auctions in Melbourne on the weekend at a clearance rate of 63.7 per cent, up from 456 at 60.6 per cent last week and 348 at 70.6 per cent last year according to Corelogic’s market summary.

Although, almost a quarter of auctions were withdrawn—compared to 12.2 per cent of Sydney auctions—as the Victorian state government announced a six week lockdown and ban on auctions from 8 July.

New home sales for Victoria also jumped 47.8 per cent in June compared to May but this was not enough to offset dismal results from the previous three months, according to HIA chief economist Tim Reardon.

“The improvement in June can be seen across all the states which is a good indication that the HomeBuilder program is working, to varying degrees in each jurisdiction,” Reardon said.

“Without intervention, a significant contraction in the volume of work on the ground would have occurred in second half of 2020 leading to a contraction across the wider economy.”

Nationally the cancellation rate remained elevated at 23 per cent down from a peak of 30 per cent in April indicating many households decided not to proceed with their purchase.

This was reflected in the ABS home lending figures for May which recorded the largest monthly decline—driven by strong falls for home loans in New South Wales and Victoria.

Corelogic head of research Eliza Owen said that when less money was lent for the purpose of buying property, they typically also saw a drop in the number of transactions.

“Despite signs of rising transaction activity and finance volumes recently, significant headwinds lie ahead for sales activity,” Owen said.

“With the re-introduction of the stage three lockdown across Melbourne, the impact on sales volumes is two-fold.

“There is the physical limitation on selling homes that come with social distancing, as well as a more general fall in consumer confidence.”