Melbourne property prices flat but short-term rebound predicted
Melbourne’s house prices completely flatlined through the worst of the coronavirus crisis, new data shows, but are expected to bounce back in the short term as the city reawakens post-lockdown.
Figures from the latest Domain House Price Report, released Thursday, laid bare the impact of Melbourne’s property market hiatus brought on by the bans on public inspections and auctions with no change in the median house price for the September quarter.
House prices are still better off than this time last year though, having risen since September last year by 1.6 per cent to a median of $875,980.
While house prices remained steady, apartment prices took a slight dip, falling just 0.1 per cent to a median of $536,659.
The next few months could see a short-term rebound in the Melbourne property market, Domain senior research analyst Nicola Powell said, with pent-up demand keeping house prices stable.
“I do think pent-up demand and supply will see a flurry of activity and that this will support prices,” Dr Powell said. “It’s something we’ve seen in other countries that have come out of a strict lockdown.”
Dr Powell said the flat prices over the quarter reflected the lack of activity during August and September but also showed the market had remained strong.
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“I think Melbourne house and unit prices have shown incredible resilience over the past quarter,” Dr Powell said. “But I think we’re not seeing the true economic impact of COVID-19 in the market in Melbourne yet.
“It’s still being propped up at the moment by government support and the banks offering people a break from mortgages.”
The next few months would reveal the full extent of the impact including on investors in the inner city, who were most at risk having been hit by the lack of international students and hospitality workers who normally rented there, Dr Powell said.
Though overall prices were flat, some parts of Melbourne saw house and unit prices rise.
Inner-city region suburbs were among the best performers during the crisis, where house prices rose by 1.2 per cent over the September quarter to a median of $1.265 million.
The best performing area for apartment prices was the west, where prices jumped by 10.2 per cent over the quarter and 12.1 per cent over the year, to $471,000.
Barry Plant Taylors Lakes Jim Hatzimoisis said first-home buyers had boosted the market during the lockdown, continuing to buy and take advantage of government incentives on offer.
“There was a massive appetite from them,” Mr Hatzimoisis said.
The Mornington Peninsula saw the biggest growth in both house and unit prices. House prices there rose 1.9 per cent over the quarter and a huge 7.8 per cent since September last year, to a median of $743,750.
Unit prices were up 7.3 per cent over the quarter and 6.6 per cent over the year to a $490,500 median.
The rise was not surprising as the area had been very popular with Melburnians looking to make a lifestyle change or even buy a holiday home during the pandemic, agents say.
Looking to make the move to the peninsula are Anna and Peter Koren, who listed their four-bedroom, converted warehouse in Prahran in early October after the ban on in-person inspections was lifted.
Ms Koren said the couple were planning to move to Sorrento to downsize and also be closer to one of the two businesses they own.
With three older sons, two of them now living out of home, the couple felt it was time to move on.
“For us it was a personal decision to sell, we hadn’t really looked at the market,” Ms Koren said.
“[But] we’re feeling much more confident – we’re feeling fantastic about things being opened up again.”
While house prices in the inner suburbs were up, those further from the CBD were down.
The outer east had the biggest drop in house prices in the September quarter, down 3.2 per cent to a median of $755,000.
The outer east also had the largest apartment price falls, with unit prices plummeting by 6.9 per cent to a median of $551,000.
The area had seen falls before the coronavirus pandemic hit, with the trend continuing over the past quarter, Domain’s Dr Powell said.
These price falls could change with agents reporting a boost in the number of listings and in confidence from buyers and vendors across the city.
Marshall White Stonnington director and auctioneer John Bongiorno said a “tsunami” of buyers and sellers had hit the market, following the easing of restrictions.
“A wall of water hit us all of a sudden when people were allowed to get out and see properties,” Mr Bongiorno said.
That included regional Victorian buyers who were still waiting for restrictions to ease further to enable them to get into Melbourne to look through properties face-to-face.
He predicted the market, particularly in inner Melbourne, would see auctions occurring much later into the year.
“It will go right up until Christmas and probably kick off again in early January, rather than later in January,” Mr Bongiorno said.
Advisory firm Charter Keck Cramer’s director of residential research and strategy Angie Zigomanis said the upcoming challenge for the market would be after protective measures like JobKeeper and JobSeeker finished, and the moratorium on evictions ended.
This would add pressure to investors who might already be thinking about selling.
“Some investors would be [financially] distressed or becoming increasingly uncomfortable in the market or want to sell down their debt,” Mr Zigomanis said.
However, with Millennials now looking to upgrade or even buy into the market, this could temper some of the price falls, he said.
“There’s a wave of Millennials now having kids and moving on with their lives,” he said. “Lower interest rates give them the impetus to get into the market.”
Ref: MELISSA HEAGNEY, SENIOR JOURNALIST (on 29 Oct 2020). Melbourne property prices flat but short-term rebound predicted. Retrieved from https://www.domain.com.au/news/house-price-report-melbourne-property-prices-flat-but-short-term-rebound-predicted-999968/.
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