Melbourne’s Resilience Through Lockdown

Melbourne’s resilience through lockdown is quite impressive.

Isolation, work-from-home measures, and social distancing haven’t broken our community spirit, neither have they ruined our housing sector.  In fact, when it comes to property, Melbourne’s market remains robust and buoyant.

A recent report published by top accounting firm KPMG confirms that the Covid19 pandemic period has seen a significant upswing in housing prices across most of the Australian capital cities. The numbers don’t lie: housing prices are now between 4 – 12% higher than they would have been expected to be in a non-pandemic situation. For units, prices are averaging at a whopping 13% higher than they would have been in ‘normal’ times.

And Melbourne is no exception. The data reveals that lockdowns haven’t spooked the buyers.  In fact, conditions that might have been expected to deal the market a deadly blow have only temporarily stalled momentum. The resurgence each time after restrictions have eased has been breathtaking.

It’s true that each lockdown has seen a short, sharp fall in both listings and sales, but the recovery after each ‘lockdown stint’ has been swift and powerful, with minimal impact on the rising prices.

Across the city, auction results have remained strong despite both circuit-breaker and extended lockdowns. In fact, according to CoreLogic, auction results have gradually become more favourable during lockdown conditions.

So, what’s driving this upwards spiral? Why has the pandemic, which has resulted in an ongoing global economic recession, caused a spike in property prices across our city?

Let’s zoom in on a few of the reasons behind consumer behaviour and preferences:

1. Government Stimulus Packages

Generous government support during the Covid crisis has given the Australian housing market the boost it needed to remain strong over the past 18 months.

With the handing down of the new federal budget in May 2021, came the announcement of further stimulus packages and the extension of some existing ones, including the First Home Loan Deposit Scheme, the Family Home Guarantee Scheme, and the First Home Super Saver Scheme.

These grants, largely aimed at the low-middle range wage earners, have given many Melbournians a leg in the door of the property market – with consumer confidence high, the results in the real estate sector have been obvious.

2. Low Interest Rates

Along with current government support, historically low interest rates have put home ownership within reach of many folks across the city, including first home buyers and vulnerable families.

Many homeowners or first-time buyers have taken the plunge at a time when it’s comparatively cheap to service a mortgage.  In addition to the benefit of low interest rates, many folks have saved extra cash over the past 18 months due to not being able to holiday, eat out and spend on leisure activities.

And while many things have changed in our lives (and continue to change) the interest rates in Australia aren’t likely to for some time.  With the RBA continuing to maintain that it will not be raising rates until at least 2024, now’s the time to invest!

3. Ability to Change

Melbournians are an adaptable community. We’ve changed our lifestyles in nearly every way imaginable – from work and school to getting groceries delivered to the door and virtual coffees with friends, we’ve adapted, accommodated, and tailored our lives to comply.

In the housing sector, buyers and sellers have adjusted their strategies and the market has gone on.  While some of the traditional practices such as large gatherings at auctions have had to change, buyers have moved with the time and embraced virtual property inspections and video meetings. And the results speak for themselves.

4. Shift to the Suburbia

Across the city of Melbourne, there’s been an undeniable pivot towards suburbia and even rural Victoria. It’s time for a tree change.

For a significant proportion of the working class, the pandemic has been the catalyst for a lifestyle change.  And interestingly enough, many are enjoying their new found work-from-home arrangements, rather than travelling into the CBD every day.  With proximity to work no longer a prime consideration, larger properties in the less densely populated suburbs have become very popular.

Supply has been outweighed by demand, which continues to drive property prices up, and many properties in the suburbs have been sold prior to auction, and well above expectations.

The team at Love & Co have embraced the changes that Covid19 has brought, and we’re excited about the real estate market in Melbourne’s North.  We care about our clients and we’re passionate about seeing them realise their dreams of homeownership.

The information in this article is for information purposes only and should not be taken as financial, legal or personal advice. 

While care has been taken to ensure that information contained in this article is true and correct at the time of publishing, any changes after the time of publication may impact on the accuracy of this information.

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