fbpx

Compare Listings

Are Real Estate Prices Falling in Melbourne?

Are Real Estate Prices Falling in Melbourne?

An announcement from ANZ had found that prices of houses and units across Melbourne had dropped 2.2% since March 2020 at the beginning of the COVID 19 lockdowns. Why hasn’t the market fallen further and is the impact of the restrictions being felt across all aspects of the market?

 

Banks are supporting mortgages

Most large banks have offered struggling owners mortgage payment freezes on their house payments however that is supposed to end in the coming months. 

Right now on realestate.com.au, there were just two distressed sales out of more than 160,000 listings available in Australia, mainly due to loan repayment freezes. But if banks stop supporting homeowners that have been affected by the economic recession, mortgagee sales would likely increase dramatically causing house prices to fall.

 

Not all suburbs are feeling the pinch.

The rapid rise in unemployment among young people has hit the rental market very quickly. Rental listings also aided by a rise in short-term holiday listings becoming long-term residential listings – increased dramatically on realestate.com.au in the months after the health crisis, causing rental prices to drop. While the increase has eased significantly, it is leading to problems in some suburbs.

Rental listings are no longer rising, in the same way, they were early in the pandemic, but there are problems in a few suburbs, which now account for half of all increases in rental listings since the first round of lockdowns. These suburbs are highly exposed to renters and most are close to universities.

For investors in these suburbs, many are struggling to find tenants or are experiencing a significant drop in rental return. With price growth minimal and concerns about future growth, it appears many are looking to sell out. The biggest increases in apartments for sale are now in high-development areas, many of which are also seeing big increases in rental listings.

 

Parts of the economy is still performing very well

Despite the recession, not every part of the economy is struggling. For example, the mining sector is giving Western Australia and Queensland a big boost, while strong employment in federal government services is a boon for Canberra.

As a result, Perth is seeing strong buyer demand on realestate.com.au and Queenslanders are the most confident buyers and sellers in Australia. Meanwhile, Canberra house price growth has not stopped for a single month since mid-March.

 

People are saving more money than they ever have.

For now, the majority of well-paid, white-collar professionals have escaped job losses, but the recession is making them nervous and households are currently saving nearly 20% of their disposable income, compared to 6% in the first quarter of 2020.

While people are saving more, safer conditions among well-paid job types are also good news for premium property markets. We are yet to see tough house price conditions emerging in Australia’s most expensive suburbs, with many of them continuing to see price growth through the pandemic.

 

Job Keeper and Job Seeker Payments.

Record levels of government stimulus, such as job keepers, are helping keep house prices steady. While this is generally helping the unemployment rate and the stability of our banks, policies targeting home buyers such as the 5% home loan deposit scheme, state government first-home buyer incentives and the recent HomeBuilder grants are ensuring a steady flow of demand into housing.

If borders remain closed and short stay and student accommodation remains vacant we will continue to see price falls in areas where rental vacancies are high. If banks and the government stop there support than the wider property market will also see drops in prices.

 

img

Kial jarred

Related posts

Escape to the Country

Melburnians looking to escape the city for regional areas have increased their desire to buy...

Continue reading
by Kial jarred

The “New Normal”

Due to COVID-19, the global and local economic condition has been widely impacted. According to GDP...

Continue reading
by Jeffrey Koby

How to Choose a Commercial Property Location

When trying to choose commercial property to set up your business, one of the key factors during...

Continue reading
by Jeffrey Koby

Join The Discussion