Property Market Update - July 2020
As Australia starts to relax its COVID-19 restrictions, Victoria has suddenly seen a spike in infections, and 12 suburbs are being put back into stage 3 lockdown. What does this mean for the Melbourne property market? How will this impact the Melbourne property market?
What should you do, if you are STILL house hunting? Savvy property hunters are still buying throughout the lockdown. Should you have bought? Is it too late for you?
Melbourne has, unfortunately seen a spike in COVID-19 infection numbers. 12 suburbs have been marked as COVID hotspots and travel in and out of these suburbs are being discouraged. This may seen dire, but how would this affected interests in the property market?
While buyers are still buying, and properties are still being sold, CoreLogic has reported a drop in median prices. Is this a sign that the property market is crashing again? Unlikely.
While drops of 1% make newsworthy and eye catching headlines, it does not necessarily mean prices are starting to crash. Prices seem to be trending down, but with buyers usually shopping within a price range of +/- 10%, it is hardly a cause for concern.
What's more worrying is the curge in COVID-19 cases in Victoria. The possibility for a state-wide lockdown is high. Victoria could be put back into a Stage 3 restriction, if not worse. This means, non-essential businesses will once again be forced to shut, and non-essential travel banned.
Outlook for the next 3 months
If a statewide lockdown is re-instated in Victoria, activities could see a slow-down in buying and selling. Prices over the next 3 months will likely be stagnant (+/- 2-3%). Why so?
Here is why:
Foreigners are buying into Melbourne properties. They have seen how the Melbourne property market has consistently performed over the last 30 years, and the low Australian dollar is making this even more attractive. They will be reaping the rewards of low AUD (which will appreciate in future), plus the consistent 7% annual growth in property prices.
While the rise in COVID-19 numbers are alarming, it is not unexpected. The spread of COVID-19 numbers worldwide, has reached a point where its containment and eradication is no longer practical and possible. People will start to get used to the the notion of living with COVID-19 for a while. When Smallpox, tuberculosis, AIDS were first discovered, people are equally alarmed at how deadly they are. Despite decades of trying to cure and eradicate these diseases, they are still around. And life goes on for us. Humans will learn to adapt to the new normal.
Other than Victoria, all other states and countries in the Oceana reagion is starting to open us, and business activities are resuming. As the economy of the states around Victoria boom, Victoria has a lot to catch up. And the longer it stays shut, the more it will have to catch. And it will catch up. Victoria will not stay shut forever. We believe if a lockdown is re-instated, it will likely last 4 to 6 weeks, max.
What does this mean for the buyer?
Well... this would be the million dollar question. What should you do ? Get in touch to find out.