How has the latest lockdown impacted Australian property prices?
As an avid property lover, I’m always curious to see what impact any changes to our day to day lives have on the property market.
The past 18 months have fascinated me, as thanks to the pandemic we have been experiencing unprecedented events and it seems that everyone has had an opinion on how they will impact property prices.
February 2020 was when the COVID-19 really started to grab mine, and the media’s, attention. Almost daily we were hearing people’s opinions on what could, would, should, or is going to happen to Australia’s property market.
Well, I remember the prevailing sentiment at the time was for doom and gloom for property prices. At the time, the reasoning behind the doom and gloom made total sense to me, and indeed demand did take a hit during that first lockdown with the uncertainty caused by the pandemic and the consequent economic downswing seeing a small fall in property prices.
Yet here I sit, 18 months later, writing this blog at a time where the Australian housing market is experiencing record house prices. This is a timely reminder that there is no certainty in any market, and predictions and opinions are often simply nothing more than, at best, an educated guess.
As a result of recent surges in the virus cases within Australia we have seen almost half the country in lockdown. My curiosity has me wondering how the property markets have fared during this period of time. Well it appears that the property prices have surprisingly held up remarkably well considering almost 13 million Australians were in lockdown at the time of writing.
Auctions have been conducted online. Properties withdrawn from auction are counted as “passed in” and therefore lower auction clearance rates. Yet overall clearance rates in Sydney and Melbourne have been what I would call respectable given the circumstances.
The pool of properties being auctioned and even those available for private sale, particularly in Melbourne and Sydney, is diminishing steadily as lockdowns extend, although the appetite for homes has held up remarkably well.
It’s apparent that buyers are still out in force – owner-occupiers, investors, and first home buyers – at a time when available supply is struggling to keep up, pushing prices higher.
Whether this just reflects a need to buy from those who have recently sold their properties and are already committed to buy a new property, or a more enduring trend, remains to be seen, but I suspect it is the latter
In June the Australian property market experienced a 1.9% rise across the 5 capital cities. In comparison July has seen a 1.3% rise. Considering July has seen up to half the nation in lockdown, that’s rather remarkable.
I’m certain that concerns about how the lockdowns will impact the economy will have a flow on effect into the property market and may slow it down. I’m also certain that the number of properties coming into a space which is already seeing demand outstrip supply will fall, as if I put myself in the shoes of a vendor, I would not be planning to list my property in a lockdown with the concern that I won’t get people through the property.
Maybe that’s it. We are all aware that Australian consumer spending online is at record highs, and maybe society these days doesn’t need to physically view a property before committing? I’m not sure about you, but that doesn’t sit well for me. If I’m buying a property, I need to touch it and knock wood.
It is more likely that vendors will hold off until the lockdowns are behind us, but who knows what’s ahead?
All that is doing is limiting the supply in a market that’s currently got an appetite to consume.
As vendors delay bringing new properties to market until conditions normalise, based on what we saw in the 2020 lockdowns, I would expect buyer demand will fall.
Demand is likely to fall over the coming weeks with lockdowns looking set to continue. But later in the year, once we have control over this wave of the pandemic and vaccinations start making an impact, we can expect to see a rebound in market activity and buyer demand.
In summary, despite the disruption, property values are holding up well as there are more buyers than good properties for sale and this means property values will keep rising.