Record Values Drive Melbourne Market Ahead of Virus
Melbourne property values have entered the coronavirus crisis at record high levels, giving the market confidence that pent-up demand and positive buyer sentiment will return quickly.
Property values were up 12% in the year to March 2020, according to the latest research of industry leader CoreLogic. This was powered by sales volumes that were 11.6% higher than in the corresponding period for 2019.
Residential property values rose 3.9% in the first three months of this year, indicating a consistency to how positively buyers were viewing the market.
Sales in Melbourne and across Victoria have been hampered by a moratorium on open houses, private inspections and on-site auctions, however the market has continued to transact with online and virtual auctions and virtual inspections.
One early indicator of how the coronavirus might impact on the residential market has shown up in the national auction data. The number of properties under the hammer dropped 50.2%, while clearance rates were 37.3%.
More significantly, two-thirds of property due to go to auction were sold before they went under the hammer. This is an unusually high percentage and indicates vendors were taking offers and buyers remained sufficiently confident to commit to a purchase.
The average time a property stayed on the market in Melbourne was just 32 days, a speed of transaction beaten only by Hobart (18 days).
It will likely take a few months after the lockdown for that level of demand to return. Much will depend on not only the growth of employment and re-employment but also the attitude of banks to releasing credit.
The uncertainty caused by the pandemic has created excellent buying opportunities in Melbourne right now, even though many vendors have withdrawn from the market to see what will happen.
New listings were 1.3% higher than in the corresponding period in 2019 with 6,829 properties going on to the market. The only other city in positive territory was Sydney, up 10.8%. Nationally, the number of properties for sale has fallen 6.5% in the year to March, compared with the corresponding period. Markets in the fastest retreat were the Northern Territory, Western Australia and Tasmania.
The participation of first home buyers and investors both fell in Victoria. Some 26.6% of purchases were made by investors in the first quarter, and instances of first-home buyer purchases were down by 2.2%.
Despite this, Melbourne saw a fall of 3.4% in vendor discounts, which indicates an underlying resilience in the market that will likely re-emerge when the nation returns to normality after the coronavirus restrictions are lifted.