Listings and sales set to plunge again in Melbourne: CoreLogic

Property activity in Melbourne is tipped to mirror the earlier lockdown, as vendors lose their nerve and buyers sit on the fence.

Ray White Victoria and Tasmania chief auctioneer, Matt Condon, hosting a virtual auction earlier this year.

Melbourne house sales and new listings are set to plunge as the market faces another round of selling restrictions and blows to consumer confidence, says CoreLogic.

The property researcher’s predictions as Melbourne heads into a new six-week lockdown are based on the previous restrictions in March and April.

During that six-week period, new listings coming onto the market more than halved from their earlier highs to be 34 per cent lower than the same time in 2019.

At the same time, sales activity dropped to the lowest levels seen since the early 1990s, if normal market seasonality is removed. Home sales are estimated to have dropped by 8.1 per cent in March before plunging by 38.1 per cent in April.

CoreLogic’s head of research, Tim Lawless, said it was too early to determine the impact a second lockdown would have on prices but said market activity would likely be a case of history repeating, with vendors losing their nerve to list and buyers sitting on the fence.

“If the housing market’s performance through the previous lockdown is anything to go by, it’s highly likely that Melbourne property transaction activity will see a sharp drop over the next six weeks, with both a material decline in new listings as vendors lose confidence in testing the market, and a lower number of sales as buyers retreat to the sidelines,” Mr Lawless said.

While property market operations were not specifically listed as restricted activities under the state government‘s “stay at home” stage three outline, the Real Estate Institute of Victoria issued a statement to members on Wednesday signifying a return to virtual selling methods.

This would mirror the national stage three restrictions implemented by the federal government in March through to May, which banned public auctions and open homes.

Conducting a virtual house auction.

Consumer sentiment measures – which have historically had a strong correlation with housing market activity – have already begun to move lower as Victoria’s virus curve pushes higher.

Sentiment will likely fall further as Melburnians are faced with the economic and social implications of the lockdown, along with increased uncertainty.

Melbourne prices have recorded mild falls through the coronavirus period to date but have outpaced Australia’s other capital cities. Having started to trend lower in April, prices fell 2.3 per cent over the June quarter.

Mr Lawless did predict the shortage of available homes will help to insulate prices through increased competition, while low rates, stimulus measures and forbearance measures for distressed borrowers will help keep urgent sales at bay.

Pent-up demand saw activity pick up through May and June as the plateauing of infections signalled a return to normalcy. Eased restrictions boosted the number of home sales over the past two months by 59 per cent from the lows of April.

Mr Lawless said this will likely happen again.

“Real estate agents are arguably more prepared to switch towards an online selling environment, however, as we have seen through the previous lockdown period, the negative impacts of weaker confidence and less ability to inspect a property is likely to result in less buying and selling activity,” Mr Lawless said.

The previous lockdown period saw real estate agent activity across Victoria slump by almost 70 per cent before gradually improving post-Easter and surging once restrictions were lifted.