Melbourne Housing Market Adapting to Lockdown Conditions

Melbourne’s housing market has become more resilient through Covid-19 lockdowns, according to an industry report.

Corelogic has released an overview of the housing market performance through lockdowns and it shows the market has adapted to the ongoing pandemic and rolling lockdowns, with agents conducting physical and virtual auctions.

As well, tech-savvy buyers have been using technology to purchase properties.

While data shows a slowdown in transaction activity, the ‘catch up’ has become more pronounced after the lifting of restrictions, according to Corelogic head of research Eliza Owen.

“It is true that demand takes a hit during lockdowns,” Owen said.

“There was a lot of uncertainty amid stage two restrictions nationally last year, and sentiment for housing market outcomes plummeted.

“But supply also declined because sellers and agents knew it may not be the best time to market property … that helped to balance out the overall effect on prices.”

The Australian housing market values had a peak-to-trough decline of just 2.1 per cent through 2020, before surging 12.2 per cent through the first six months of 2021.

“A big part of why the housing market didn’t see further value declines was the enormous income support packages provided to households, the role of JobKeeper in maintaining employment relationships, low mortgage rates and mortgage repayment deferrals,” Owen said.

“In the event of another extended lockdown, the future of housing demand and supply becomes much less certain if that same government and institutional support is not there.”

Across Melbourne, auction volumes were most depleted toward the tail-end of stage four restrictions, through September and October 2020.

Owen said social distancing restrictions and falling property prices made selling conditions more challenging in Melbourne.

“Relative to the previous five years, the portion of withdrawn auctions has remained elevated in Melbourne, and were somewhat elevated in stage two restrictions across Sydney,” Owen said.

“For Melbourne, the proportion of auctions withdrawn became smaller with each lockdown … the portion of properties sold prior to auction also increased with each lockdown.

“Agents may have adapted to getting deals done prior to planned auctions, which may have become easier as property market conditions began to recover from October 2020.”

Real estate agents have adapted to run both physical and online auction formats in parallel, making it easier for prospective buyers to engage with the event if restrictions are put in place.

In the 2020-21 financial year, CoreLogic estimates there were about 582,900 transactions nationally, compared to a decade average annual volume of 455,346, the highest since February 2004.