Coronavirus: Melbourne property market full of gains ahead of pain
The COVID-19 crisis is expected to cause some pain for the Melbourne market. But before it set in, the vast majority of vendors were toasting profitmaking sales, especially on the fringe.
The Melbourne property market was motoring before COVID-19 curbed its momentum, with almost 98 per cent of houses selling for a profit in the final three months of 2019.
Fringe regions Cardinia, the Macedon Ranges, Nillumbik and Casey were just about bulletproof for sellers in that period, according to CoreLogic’s latest Pain & Gain report.
But the property data firm has forecast a sharp decline in residential sales in the coming months, as the economic impact and restrictions on real estate practices caused by the coronavirus outbreak deliver “a blunt shock to demand”.
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The report acknowledged that while December-quarter data might seem retrospective, given how much the market has since changed, this downturn was “expected to be temporary”.
“Whether it be in six or 24 months’ time, the economy may return to a state where property transactions and prices reflect the fundamentals of the Australian economy, as
opposed to the current structural changes,” it said.
“Therefore, this report … could point to opportunities in housing markets in the future.”
In the three months to December 31, 97.7 per cent of Melbourne houses sold for more than their owners originally paid for them — up from 96.6 per cent in the previous quarter.
The proportion of profitmaking unit sales also rose to 86.4 per cent from 85 per cent.
Houses held for 10 years typically gained in value and units, 8.1 years, while median hold periods for a loss were 2.3 and 6.2 years respectively.
A resounding 98.7 per cent of house and unit sellers made profits in the Macedon Ranges and Cardinia regions. But it was the first time in two years a single vendor lost money on a residential sale in the former.
Raine & Horne director Ken Grech told Leader this week he didn’t expect the region to be “hit as hard as the Melbourne market” during the pandemic, having sold seven homes in Sunbury and five in Gisborne just last week.
‘There might be people in the Melbourne suburbs wanting to come to the area,” he said.
Vendors in Nillumbik, Casey, Yarra Ranges and Moorabool also enjoyed near-flawless profitmaking rates above 98 per cent, and the Mornington Peninsula, Wyndham, Frankston, Melton and Hume, above 97 per cent.
Boroondara sellers made the highest median profit of $702,500 per sale, and came a close second ($751.27 million) to those in the Mornington Peninsula ($762.82 million) when it came to recording the biggest total profit by value.
The CBD was easily Melbourne’s least profitable market, with 33 per cent of sales making losses worth a total of $81.19 million.
CoreLogic head of residential research Eliza Owen said the Melbourne housing market had been “remarkably strong” from June to February, when dwelling values hit a record high.
Values rose 0.4 per cent to a $695,299 median in March, but are now expected to take a hit.
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PROFITMAKING HOT SPOTS
Macedon Ranges: 98.7% of sales made a profit / $337,500 median profit / $104.9m total value of profit
Cardinia: 98.7% / $233,000 / $220.09m
Nillumbik: 98.5% / $450,000 / $185.68m
Casey: 98.3% / $292,500 / $668.56m
Yarra Ranges: 98% / $310,000 / $340.8m
Moorabool: 98% / $266,000 / $61.39m
Mornington Peninsula: 97.7% / $367,750 / $762.82m
Wyndham: 97.7% / $306,000 / $468.23m
Frankston: 97.7% / $266,250 / $409.19m
Melton: 97.7% / $219,000 / $277.55m
Source: CoreLogic, December quarter
Originally published as Coronavirus: Melbourne property market full of gains ahead of pain