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Pent-up demand to shape city’s post-lockdown market

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Melbourne’s residential real estate market is rapidly returning to normal activity levels, with hundreds of prospective buyers moving to inspect new “for-sale” properties.

Vendors have responded quickly. They are listing new houses and apartments after taking advantage of Melbourne’s COVID lockdown period to prime, repaint and prepare the properties for sale.

Nelson Alexander Sales Director Arch Staver says landlords have also used the lockdown to update or renovate vacant offerings.

These rental homes, like sale properties, can now be inspected by Melburnians on a one-on-one basis following a significant relaxation of the COVID-19 restrictions.

Mr Staver says both prospective tenants and homebuyers have heavily booked inspection time slots since a ban on inspections was lifted on September 28.

“The activity levels have really skyrocketed,” Mr Staver says.

“Our real estate agents and leasing managers have seen a very high level of interest in the days following the lifting of the ban on inspections.

“That pent-up demand is a real thing. It is no longer a matter of speculation.”

There are strong indications that vendors who put their property on the market in the current climate will strongly benefit.

CoreLogic data released in early October shows Melbourne house prices are being supported by the low levels of homes for sale. New listing numbers nationally are down 22 per cent compared to a year ago and are 25 per cent below the five-year average.

The total amount of advertised homes is also down 14 per cent than a year ago, and 17 per cent below the five-year average.

On September 28, Melburnians got the green light to inspect properties one-on-one with an agent. A housemate or partner and children are also allowed at inspections, under the relaxed rules. Inspections must have a 15-minute time limit and are subject to strict mask-wearing and other cleanliness controls.

The Real Estate Institute of Victoria has also confirmed that people looking for a new home can travel farther than five kilometres from home to inspect a property.

Meanwhile, sellers can book an appraisal from any agent. However, although buyers and renters can travel farther from home, Melbourne residents are presently not allowed to travel to regional Victoria to inspect properties.

Stringent stage 4 restrictions, in place since early August, saw one-on-one inspections banned, which for all intents and purposes shut down the Melbourne market and negatively affected sales in regional Victoria.

Mr Staver says vendors are relieved to have the opportunity to sell their property, while property investors are just as relieved they can readily let out their properties.

“Seven weeks of lockdown gives you lots of planning time,” he says.

“Many people did just that and planned what their next move would be – whether it’s a move to regional Victoria, a bigger house or a new rental property.

“People are now moving to execute their plans.”

The latest CoreLogic Home Value Index released on October 1 says houses and apartment values in Melbourne fell by 0.9 per cent in the month of September to a median of $666,796. However, the analyst group’s report predicted values would bounce back once restrictions were lifted during October.

House and unit values were down 0.1 per cent across the country in September - the smallest monthly decline shown in the value index since values began to fall in May.

The modest falls follow a pick-up in consumer confidence levels and steady drops in reported COVID-19 cases.

CoreLogic head of research Tim Lawless says the combination of low-interest rates, government grants and reduced numbers of homes for sale has supported the housing market against further declines.

“The aggregate effect of low mortgage rates and the prospect that rates could fall further, low inventory levels, government incentives and improving consumer sentiment seems to be outweighing the negative economic shock brought about by the pandemic,” Mr Lawless notes.

As coronavirus numbers fall in Victoria, it looks to be full steam ahead for real estate transactions.

Mr Staver says Nelson Alexander agents were looking forward to a time in the near future where they could host an open for inspection with restricted numbers or hold an auction on the street.

“An auction on the street is the next step that we are looking forward to,” he says. “It allows us to interact with buyers a little more and interact with the community in a public way.”

The supply and demand pendulum will be finely balanced in the run-up to the end of the year. Agents active in suburbs within 15 kilometres of the CBD are tracking a steady increase in sales listings and intensified buyer interest after the lockdown, with no signs of oversupply or mortgage distress affecting the market.

People who want to buy and sell in the same market are likely to be amply rewarded. They may in fact do better by transacting in 2020 than waiting until early next year when income support grants are scheduled to end and there may be increased uncertainty.

If you would like to discuss your property needs in greater detail, please contact any Nelson Alexander office or complete the form below.

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