Through the mayhem of the first stage 2 restrictions introduced in March, the property market has shown strong resilience and has fortunately resisted succumbing to the confronting negative dialogue from numerous experts highlighted in the media.
The four months to July 31 have seen Melbourne’s house prices retract by 3.5%. This was again the highest fall of all the capital cities, and as Victoria and more specifically Melbourne, is in the midst of one of the most devastating health and economic disasters in history, I find this outcome encouraging.
Melbourne has endured the most extreme lockdowns, the highest net migration loss in the country, mass job losses, business closures and is arguably the most volatile in regard to price movement. Interestingly three of the seven states and territories actually gained ground during this period with the ACT taking first prize with a median house price increase of 1.3%. New apartment dwelling sales may soften by 60% for 20/21 from the peak of 2017 – the experts predict. Unfortunately, I see a difficult time ahead for developers who rely heavily on presales to gain appropriate finance to commence construction. Availability of finance, reduced interest from overseas, and the indefinite restrictions on migration will affect sales considerably.
The property vacancy rate in Victoria sits at a respectable 3.2% with Regional Victoria boasting an average of 1.7%. The unemployment rate has fallen by 0.7% to 6.8% against a national percentage currently at 7.5%. Interest rates remain at 2.5%; and will do so for some time. Auction clearance rates have hovered around 74% and although the number of transactions has decreased the overall market is sound.
Average days on market in the Melbourne Metropolitan area has been one month with Regional areas taking longer at approximately two months. There were 2,908 auctions during May-July and 2,023 private sales totalling 5,663 transactions. National listings were up 23% with Melbourne contributing 13%.
Stay safe and well,
Principal
The Advocates