Melbourne’s busy spring market to endure second year of lockdown

Melbourne’s property market is staring down the barrel of spending a second spring selling season in lockdown, as restrictions aimed at stopping the spread of COVID-19 are extended into what’s usually the busiest time of year in real estate.

Under the restrictions, in-person inspections and public auctions have been banned, and its impact on the market has already taken hold.

Buyers and sellers are withdrawing from the market in large numbers, despite record house prices being reached in some online auctions.

Property listings in Melbourne have fallen by 17.3 per cent over the past four weeks and agents say that’s likely to worsen coming into the spring months. The clearance rate has plummeted, falling to 47.1 per cent last weekend, while 368 properties were withdrawn from auction.

“Not being able to physically inspect a property has had a dramatic impact on the market – not many people buy a home sight-unseen,” Domain chief of research and economics Nicola Powell said.

The spring season is shaping up to be a repeat of last year’s, Dr Powell said, when Melbourne’s new listings plunged by 71 per cent in August 2020, Domain data showed.

While some home buyers can afford to wait for the expected bounce-back from the latest lockdown – Melbourne’s sixth – there are thousands of buyers and sellers who will suffer serious financial strain as a result of the shut down.

Sally Davis is one of those. She recently listed her mother’s three-bedroom villa unit in Glen Iris to fund her aged-care place but was forced to withdraw the unit from auction because no one could inspect it in person.

Now her family, including her brothers, will have to come up with another plan to pay for her aged care deposit.

“We’re now on a deadline and it’s causing us and our mother a lot of upset,” Ms Davis said. “We’re in a position where we just don’t know what to do and now we have to find alternative financing because we’ve been unable to sell.”

The family have withdrawn the unit from auction, which was to be held this weekend, until people are able to inspect properties again, she said. By then, they’ll be hitting the market at the same everyone else in Melbourne is trying to sell.

“We originally chose winter because there were fewer properties and less competition,” Ms Davis said.

Barry Plant executive director Mike McCarthy said many property owners like Ms Davis and her family were in a similar position, which was why the real estate industry was now lobbying the Victorian Government to allow one-on-one inspections during lockdown.

Sydney’s property market has remained buoyant despite its protracted lockdown and high case numbers – last weekend’s clearance rate was a massive 85.2 per cent – because in-person inspections have been allowed the entire time.

“People really are experiencing hardship behind the scenes for all sorts of reasons,” Mr McCarthy said. “They may have bought and need to sell, or [have] sold and need to buy. People thought they had plenty of time but now with the extended lockdowns they fear they may finalise their sale and not have anywhere to live.”

Once the market does reopen, experts expect the market to snap back as quickly as it did last year when the pent up demand fuelled a flurry of sales.

Ray White Victoria chief executive Stephen Dullens said two of the company’s biggest listing weeks ever were directly after the last two lockdowns – with more than 400 listings after each within seven days of restrictions being eased.

“Our data is showing us that people want to list and sell but they don’t have the confidence when there is a lockdown,” Mr Dullens said.

But Melbourne’s property market hibernation is not expected to weigh heavily on prices in the long-term.

ANZ senior economist Felicity Emmett said she expected prices would continue to grow throughout spring, though at a slower pace, just as they had in 2020.

“We might see this continuing fall in clearance rates and a slight drop in price gains during spring,” Ms Emmett said. “I think once things open up and people can actually go out and see a property that will help … there is resilience in the economy broadly and in the housing market despite the pandemic.”